Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 net income and 2021 net income.   2020 2021 a. Equipment (with a useful life of 5 years) was purchased and expensed in 2018. b. Wages payable were not recorded at 12/31/20. c. Equipment purchased in 2020 was expensed. d. 2020 ending inventory was overstated. e. Patent amortization was not recorded in 2021. _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Question

Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 net income and 2021 net income.

 
2020
2021
  • a. Equipment (with a useful life of 5 years) was purchased and expensed in 2018.
  • b. Wages payable were not recorded at 12/31/20.
  • c. Equipment purchased in 2020 was expensed.
  • d. 2020 ending inventory was overstated.
  • e. Patent amortization was not recorded in 2021.
  • _____
  • _____
  • _____
  • _____
  • _____
  • _____
  • _____
  • _____
  • _____
  • _____

 

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