march 20

scarlet

The following is from the question

During the year the company sold aa batch of chemicals to a customer for 120000. At the beginning of may 20X5 the customer returned these chemicals because the chemical mix was not in line with the customer’s specifications. A credit note is yet to be issued to the customer and the chemicals have been written down to their scrap value within inventory.

For the above risk, is the following the correct explanation

The credit note or the sales return may not have been recorded pre year end leading to revenue being overstated and receivables overstated