If no adjustment is made for a prepayment received from a customer, what is the effect on revenue?

When a prepayment is received from a customer, it represents an obligation to deliver goods or services in the future rather than earned revenue at the moment of receipt. If an adjustment is not made to properly recognize this prepayment, the revenue will be recorded prematurely, effectively overstating the revenue for the period.

This means that the revenue figure on the income statement will reflect a $2,000 increase that isn't warranted, as the revenue cannot be recognized until the goods or services have been delivered. As a result, recording this prepayment as revenue inaccurately inflates the revenue line, leading to a misrepresentation of the company's financial performance.

The other options focus on the implications related to assets, net income, and retained earnings, but the primary concern with failing to adjust for a prepayment is the improper recognition of revenue, which is accurately identified in the correct choice.