At the end of the two-year period after an inventory error, Shareholders' Equity is overstated correct understated O incorrect unless previous financial statements are restated
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- Assuming a companys year-end inventory were overstated by $5,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: EquityAn understatement of ending inventory in the year 20-1 will cause the owners equity account at the end of the year 20-2, assuming no other errors, to be (a) understated. (b) correctly stated. (c) overstated. (d) none of the above.Assuming a companys year-end inventory were understated by $16,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: Equity
- If Wakowski Companys ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?Which of the following financial statements would be impacted by a current-year ending inventory error, when using a periodic inventory updating system? A. balance sheet B. income statement C. neither statement D. both statementsIndicate the effect of each of the following errors on the following balance sheet and income statement items for the current and succeeding years: beginning inventory, ending inventory, accounts payable, retained earnings, purchases, cost of goods sold, net income, and earnings per share. a. The ending inventory is overstated. b. Merchandise purchased on account and received was not recorded in the purchases account until the succeeding year although the item was included in inventory of the current year. c. Merchandise purchased on account and shipped FOB shipping point was not recorded in either the purchases account or the ending inventory. d. The ending inventory was understated as a result of the exclusion of goods sent out on consignment.
- A company uses the periodic inventory method and the beginning inventory is overstated by $9,000 because the ending inventory in the previous period was overstated by $9,000. The amounts reflected in the current end of the period balance sheet are Assets Owner’s Equity Understated Understated Overstated Correct Overstated Overstated Correct CorrectBJ Company uses a periodic inventory system. If the company?'s beginning inventory in the current year is overstated, and that is the only error in the current year, then the company?'s income for the current year will be understated and assets correct. understated and assets overstated. overstated and assets overstated. understated and assets understated.The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an overstatementor an understatement of the gross profit forthe year? (b) Which items on the balance sheet atthe end of the year were overstated or understatedas a result of the error?
- Assuming a company’s year-end inventory were overstated by $5,000, indicate the effect(overstated/understated/no effect) of the error on the following balance sheet and income statement accounts.A. Income Statement: Cost of Goods SoldB. Income Statement: Net IncomeC. Balance Sheet: AssetsD. Balance Sheet: LiabilitiesE. Balance Sheet: EquityAn understatement of ending inventory by $2 million in one period results ina. an overstatement of gross profit by $2 million in the next period.b. an understatement of gross profit by $2 million in the next period.c. no effect on net income of the next period.d. an overstatement of the beginning inventory by $2 million in the next period.9. An entity uses periodic inventory system and neglected to record a purchase of merchandise on account at year end. This merchandise was omitted from the year end physical count. How would these errors affect the entity's Assets, Liabilities, Shareholders' Equity at year end and Net Income for the year?* Asset - UNDERSTATE, Liabilities - UNDERSTATE, Shareholders' Equity - NO EFFECT, Net Income - NO EFFECT Asset - UNDERSTATE, Liabilities - NO EFFECT, Shareholders' Equity - UNDERSTATE, Net Income - UNDERSTATE Asset - NO EFFECT, Liabilities - OVERSTATE, Shareholders' Equity - UNDERSTATE, Net Income - UNDERSTATE Asset - NO EFFECT, Liabilities - UNDERSTATE, Shareholders' Equity - OVERSTATE, Net Income - OVERSTATE
