Concept explainers
(a)
The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a
To Prepare: The correct income statement for 2016, and 2017.
(b)
To Explain: The cumulative effect of the inventory error on total gross profit for the 2 years.
(c)
To Write: A letter to the president of Company S regarding the nature of inventory error and its effect on the financial statements.
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