Do you agree with the following statements? Express your opinion on each statement. An inventory error that causes an understatement (or overstatement) for net income in one accounting period, if not corrected, will cause an overstatement (or understatement) in the next. Since an understatement (overstatement) of one period offsets the overstatement (understatement) in the next, such errors as said to correct themselves. Market usually means replacement cost of inventory when applied in the LMC. Cost of goods available for sale equals the inventory plus cost of sales.

Q: Which of the following statements about the use of the FIFO assumption is NOT true?   a.   The…

A: Solution: "The FIFO assumption produces inventory asset values that are based on older purchase…

Q: Where there is a reversal of a previous inventory write-down, the entry would involve a _______to…

A: Inventory is the combination of all the goods which are ready for sale, goods which are in process,…

Q: der the periodic inventory system, all increases and decreases in inventory, such as purchases,…

A: Solution: False.  Under periodic inventory system Daily inventory records are not maintained.

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Solution Concepts Purchase account is an expense and if it is understated profit will increase and…

Q: If the net realizable of an entity's inventories is less than its cost, the entry to adjust the…

A: Introduction: Under the lower of cost or net realizable value (LCNRV) method, if net selling price…

Q: Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system?…

A: Definition:

Q: What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for…

A: Inventory shrinkage: When there is a difference between inventory as per books and actual inventory…

Q: Which of the following should not be reported retroactively? Use of an unacceptable accounting…

A: Accounting principles are the rules and criteria that businesses must adhere to when reporting…

Q: Which of the following statements regarding inventory shrinkage is not true?

A: Suppose that there is inventory of $400,000( 5,000 units) in any firm in the beginning of accounting…

Q: which of the following is not true regarding standards for interim reporting? a. declines in…

A: The interim reporting refers to the reporting under which the financial reports for a shorter period…

Q: If beginning inventory is understated by $980O, the effect of this error in the current period is…

A: The COGS is determined based on beginning inventory, inventory purchase, and closing inventory. COGS…

Q: How much should be reported as loss from inventory write-down?

A: New Unit Cost to Sale = Unit Selling price updated - Unit Cost The difference in Profit per Unit =…

Q: Explain the appropriate accounting treatment required when a change in inventory method is made.

A: Definition:   Change in inventory method: Change in inventory method is said to be the difference…

Q: BJ Company uses a periodic inventory system. If the company?'s beginning inventory in the current…

A:

Q: 1, how can assets and liabilities be classified for a more informative balance sheet?

A: Introduction :- A classified balance sheet is a financial statement with classifications like…

Q: Ann M. Martin Company makes the following errors during the current year.    1.   Overstatement of…

A: Assets, liabilities and stockholders' equity are included in the balance sheet of the company.

Q: What are the key factors that can lead to an under/overstatement of the inventory balance?

A: Answer: Inventory balances are sometimes overstated and sometimes understated.

Q: If purchases were recorded correctly but ending physical inventory is understated, which one of the…

A: Working capital, conjointly referred to as web assets (NWC), is that the distinction between a…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: When a periodic inventory system is used, a.only revenue is recorded each time a sale is made.…

A: Under perpetual inventory, both the sales entry and cost of goods sold entry are recorded each time…

Q: Which of the following statements is incorrect? Select one: a. By using the IFRS, goods shipped on…

A: Option C is correct.

Q: The three types of accounting changes, including error correction, are:                         Code…

A: Introduction:- The following three types of accounting changes, including error correction as…

Q: Which of the following would cause periodic ending inventory to be overstated?

A: Note - the answer has been provided on the basis of information available in question. If any…

Q: What is the effect on net income if a company fails to record a purchase in transit (FOB shipping…

A: Accounting for inventory Inventory is all type of goods and products held by the seller to sell in…

Q: What are the reasons for making an estimate of the value of ending inventory?

A: Inventory- It is the amount of those units which is not sold yet by the entity or the units which…

Q: Importance of Inventory Valuation What needs to be considered when not only counting inventory, but…

A: SOLUTION- INVENTORY IS GOODS LYING IN THE STOCK OF THE ENTITY WHICH IS EITHER PURCHASED OR…

Q: Required: 1. Prepare the income statements to reflect the correct amounts, taking into consideration…

A: Overstatement of ending inventory will reduce the cost of goods sold and also increase the opening…

Q: The failure to record a purchase of merchandise on account even though the goods are properly…

A: Error of Omission: It is an  error where  no entry  is being recorded even though  transactions  are…

Q: what are the effects of inventory errors on the financial statements

A: Incorrect recording of Inventory balance results in the Inventory errors.

Q: An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an…

A: option a is the correct answer.

Q: Explain what is meant by the cost rule or net realizable value, whichever is less, and how it is…

A: As per IAS -02 inventory should be measured on cost or Net realizable value whichever is lower.…

Q: TRUE OR FALSE? The increase in the provision for inventory obsolescence is treated as a change in…

A: Accounting policies are the set of principles to be followed in the preparation of financial…

Q: Which of the following is not a characteristic of non-counterbalancing error? a. If not detected,…

A: The errors which are not automatically corrected in the following accounting period is known as…

Q: Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a.…

A:

Q: The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an…

A: (a)

Q: following is accounted for prospectively? Change in reporting entity. Change in…

A: A change in an estimate is accounted for prospectively.

Q: Explain briefly the application of the LCM rule to ending inventory. Describe its effect on the…

A:

Q: Both the gross profit method and the retail inventory method provide a way to estimate ending…

A: Gross Profit Method: Under this method, the beginning inventory is added to the net purchases during…

Q: Describe the accounting treatment for a change in inventory method other than to LIFO.

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: 1. If the inventory account at the end of the year is understated, the effect will be to…

A: SOLUTION- IF ENDING INVENTORY IS UNDERSTATED , THE COST OF GOOD SOLD FOR THAT YEAR (2018) WILL BE…

Q: Under a perpetual inventory system, acquisition of inventory is dented to the purchases account.…

A: Under the perpetual inventory system, Inventory transection is charged through the merchandise…

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: If a misstatement of inventory occurs, the net income for-----periods will be misstated

A: The ending inventory affects the income statement and after that ending inventory becomes the…

Q: If ending inventory in Period 1 is​ overstated, gross profit in Period 2​ is

A: The correct answer is Understated.

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Cost of goods sold (COGS)- The cost incurred on the goods sold during the period is referred to as…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.