Recording revenues early overstates current-period income; recording revenues late understates current period income.

This is because revenue recognition must follow the matching principle, which requires that revenues be recognized when earned (usually when goods are transferred or services rendered) and matched with the expenses incurred to generate those revenues. If revenues are recorded too early, the associated expenses may not yet have been incurred, resulting in an overstatement of income. If revenues are recorded too late, the associated expenses may have already been incurred in a previous period, resulting in an understatement of income for the current period.