!!!!!!!!!!! What is the combined effect on net income of a $15,000 understatement error to ending inventory for the two-year period if the error is not corrected? Net income will be overstated by $15,000. Net income will be understated by $15,000. The errors are cumulative and the total net income error will be double. The errors cancel out and the total net income for the two periods will be correct.

!!!!!!!!!!! What is the combined effect on net income of a $15,000 understatement error to ending inventory for the two-year period if the error is not corrected? Net income will be overstated by $15,000. Net income will be understated by $15,000. The errors are cumulative and the total net income error will be double. The errors cancel out and the total net income for the two periods will be correct.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 13PB: Company Edgar reported the following cost of goods sold but later realized that an error had been...

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Company Edgar reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 12,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
At the end of a year it is determined that Ending inventory is understated by $10,000 What is the incremental impact on net income of this error next year. If $0, write "0". If you answer was overstated 10,000 you'd write 10,000. If understated 10,000 you'd record -10,000.
Ebbers Corporation overstated its ending inventory balance by $15,000 in the current year. What impact will this error have on cost of goods sold and gross profit in the current year and following year?
Assume that the ending inventory of a merchandising firm is overstated by $40,000. a. By how much and in what direction (overstated or understated) will the firms cost of goods be misstated? b. If this error is not corrected, what effect will it have on the subsequent period's operating income? c. If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subsequent period) combined?
If ending inventory is overstated in the current fiscal year, what effect will this have on net income for the next fiscal year? a.Net income would be understated. b.Net income would only be affected in the current fiscal year, and it would be understated. c.There would be no effect on net income. d.Net income would be overstated.
If ending Inventory is overstated at the end of the year, profit will be: 12 Cvens taled b) Understated c) Correct d) Less than the profit of the previous year e) None of the above
A firm recorded it's ending inventory for the previous year at $40,000. It realized at the end of the first quarter of the current year that the number was misstated and should actually be $30,000. What corrective entries need to occur to ensure net income is not affected at the end of the current year? There are no corrections to be made. The firm should account for the misstated inventory in a separate cost of goods sold entry. There is no way to fix the entry and the net income will remain affected. The firm should account for the misstated inventory at the end of the current year.
The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an overstatementor an understatement of the gross profit forthe year? (b) Which items on the balance sheet atthe end of the year were overstated or understatedas a result of the error?
If beginning inventory is understated by $15,000, the effect of this error in the current period is Cost of Goods Sold Net Income Understated Overstated Overstated Understated Overstated Overstated Understated Understated
What is the effect of a $40000 overstatement of last year's inventory on current years ending retained earning balance? Overstated by $40000. Need more information to determine. Understated by $40000. No effect.
If ending inventory is understated by $25,000, what effect will this have on cost of goods sold and net income? a.Cost of goods sold is overstated by $25,000, and net income is understated by $25,000. b.Cost of goods sold is understated by $25,000, and net income is understated by $25,000. c.Cost of goods sold is understated by $25,000, and net income is overstated by $25,000. d.Cost of goods sold is overstated by $25,000, and net income is overstated by $25,000.
Contrast the effects that LIFO vs. FIFO would have on ending inventory, net income and cash flow in a period in which prices are rising? Assume that in 2021, Graham Company discovered that December 31, 2019 inventory was overstated. Discuss the impact that this error would have had on 2019 net income, 2020 net income and the combined net income of the two years.