The CFO of the Benson Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $675,000 as a product cost in an accounting period when the company made 9,000 microscopes and sold 6,500 microscopes. Benson rewards its officers with bonuses that are based on net earnings. Required a. Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) would be overstated or understated as a result of the misclassification of the downstream transportation expense. Determine the amount of the overstatement or understatement for each element. Note: If there is no effect, select "Not affected" from the dropdown provided. Enter all answers as positive values. Assets Liabilities Retained earnings Revenue Expense Net income

The CFO of the Benson Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $675,000 as a product cost in an accounting period when the company made 9,000 microscopes and sold 6,500 microscopes. Benson rewards its officers with bonuses that are based on net earnings. Required a. Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) would be overstated or understated as a result of the misclassification of the downstream transportation expense. Determine the amount of the overstatement or understatement for each element. Note: If there is no effect, select "Not affected" from the dropdown provided. Enter all answers as positive values. Assets Liabilities Retained earnings Revenue Expense Net income

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 47P

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