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credit notes issued post yr end would identify possible overstatement of income rather than understatement.
Maam could you explain this statement with the help of an example?
In December, Apple Co raises an invoice for $10,000: Dr Receivable/Cr Revenue
In January, it cancels the invoice with a credit note: Dr Revenue/Cr Receivable
If the credit note isn’t accrued at 31 December: Dr Revenue/Cr Credit note accrual (which would be offset against trade receivables in SoFP), revenue will be overstated.
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