What does it mean in accounting when they say accounts are overstated or understated?

Question

I have to look at transactions and figure out which accounts are over stated and understated. How do I do that? The three columns I have to put overstated, understated, or NA are Total Revenue, Total Expenses, Net income.

Answer 1

Well... I can't help here too much except to give you definitions.

"understated" means that the "stated" value is "under" what it should be. In other words, the number is wrong and it should be bigger than it is.

"overstated" is the reverse. The number is more than it should be, so it ought to be smaller.

I guess "NA" in this case would be not applicable, i.e. the calculation is correct.