When the current year's ending inventory amount is understated, the I. Next year's net income is overstated II. Current year's non-current assets are understated III. Current year's cost of goods sold is overstated O A. I only B. II & III only O C. II only D. I & III only
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- Net income at year end will be overstated if a. Prepaid expense is not recognized b. Accrued income is not recognized c. Inventory at year end is understated d. Purchases during the year are understatedNet income at year end will be understated if a. Insurance expense is not recognized b. Accrued income is not recognized c. Inventory at year end is overstated d. Sales revenue during the year is overstatedNet income at year end will be overstated if Group of answer choices a. Accrued income is not recognized b. Prepaid expense is not recognized c. Purchases during the year are understated d. Inventory at year end is understated
- a. Determine the adjustment to the allowance for overvaluation account. b. Compute the consolidated inventory at the end of the year.What are the effects (UNDERSTATED, OVERSTATED, NO EFFECT AT ALL) of these inventory errors on (a) the current year's ASSET, LIABILITY, OWNERS EQUITY, COST OF GOODS SOLD, NET INCOME, and (b) the subsequent year's ASSET, LIABILITY, OWNERS EQUITY, COST OF GOODS SOLD, NET INCOME? Error 1. Understatement of ending inventory and understatement of purchases, but the purchase was recorded the next year. Current Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Subsequent Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Error 2. Sales of the current year recorded in the following year (corresponding goods were properly excluded from ending inventory of the current year) Current Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Subsequent Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Include some simple explanations. Thank you.1. In the statement of financial statement restated to current cost, what amount should be reported as inventory on December 31? a. 1080000 b. 2880000 c.975000 d. 870000 2. What amount should be reported as unrealized holding gain on inventory for the current year? a. 210000 b. 135000 c. 560000 d. 0 3. In the income statement restated to current cost, what amount should be reported as cost of goods sold for the current year? a. 2320000 b. 2880000 c. 2600000 d. 2375000 4. In the income statement restated to current cost, what amount should be reported as realized holding gain from the inventory sold for the current year? a. 225000 b. 135000 c. 350000 d. 505000
- Show how the following independent errors will affect net income on 2021. Choose if its overstated, understated and no effect Ending inventory in 2020 overstated Failed to accrue 2020 interest revenue A capital expenditure for factory equipment (useful life, 5 years) was erroneously charged to maintenance expense in 2020 Failed to count office supplies on hand at 12/31/20. Cash expenditures have been charged to an office supplies expense account during the year 2020 Failed to accrue 2020 wages Ending inventory in 2020 understated Overstated 2020 depreciation expense; 2021 expense correctGross profit is equal to Select one: a. revenues - expenses b. sales - cost of goods sold c. profits plus depreciation d. earnings before taxes minus taxes payableShow how the following independent errors will affect net income on 2020. Choose if its overstated, understated and no effect Ending inventory in 2020 overstated Failed to accrue 2020 interest revenue Failed to count office supplies on hand at 12/31/20. Cash expenditures have been charged to an office supplies expense account during the year 2020 Ending inventory in 2020 understated Overstated 2020 depreciation expense; 2021 expense correct Ending inventory in 2020 overstated Failed to accrue 2020 interest revenue A capital expenditure for factory equipment (useful life, 5 years) was erroneously charged to maintenance expense in 2020 Failed to count office supplies on hand at 12/31/20. Cash expenditures have been charged to an office supplies expense account during the year 2020. Row Failed to accrue 2020 wages Ending inventory in 2020 understated Overstated 2020 depreciation expense; 2021 expense correct
- Please prepare a cost by nature/expense by nature income statement for the following points. In particular please explain whether point a) (first point) should be included in the income statement. In point a), Is there sufficient information for write-off expenses to be recorded in the income statement and should write-off of assets be included in the income statement? a) Write off (in minus) of short-term financial assets 9 000b) Other costs by nature 4 000c) Change in inventories of traded goods + 2 000d) Revenue from sale of building 50 000e) Income tax 10%f) Revenue from sale of traded goods 12 000g) Retained profits from previous years 10 000h) Accumulated depreciation of building 49 000i) Historical cost of building 102 000State how each of the following items is reflected in thefinancial statements.(a) Change from FIFO to LIFO method for inventoryvaluation purposes.(b) Charge for failure to record depreciation in a previousperiod.(c) Litigation won in current year, related to prior period.(d) Change in the realizability of certain receivables.(e) Write-off of receivables.(f) Change from the percentage-of-completion to thecompleted-contract method for reporting net income.State the effect of the following errors if OVERSTATED, UNDERSTATED, or NO EFFECT. NO. ERRORS EFFECT IN 1. Omission of accrued expense in year 2021 Retained Earnings, 12/31/2022 2. Omission of prepaid expense in year 2021 Net income of 2022 3. Omission of accrued income in year 2021 Asset, 12/31/2022 4. Omission of unearned income in year 2021 Income of 2022 5. Sales of 2021 recorded as sales of 2022 Retained Earnings, 12/31/2022 6. Purchases of 2021 recorded as purchases of 2022 Retained Earnings, 12/31/2022 7. Inventory, 12/31/2021 is overstated Net income of 2022 8. Inventory, 1/1/2021 is understated Net income of 2022 9. Depreciation of 2021 is understated Net income of 2022 10. Interest income is recorded as Rent Income Net income