Records showed that as of December 31, 2020, accrued salaries payable of P21,000 were not recorded in Company’s books. In addition, office supplies on hand of P9,000 at December 31, 2020 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. What is the effect of these two errors? A. 2020 net income and December 31, 2020 accumulated profits are understated by P9,000 each. B. 2019 net income is overstated by P12,000 and 2020 net income is understated by P9,000 C. 2019 net income and December 31, 2019 accumulated profits are understated by P21,000 each. D. 2020 net income is understated by P30,000 and January 1, 2021 accumulated profits is understated by P9,000
Records showed that as of December 31, 2020, accrued salaries payable of P21,000 were not recorded in Company’s books. In addition, office supplies on hand of P9,000 at December 31, 2020 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected.
What is the effect of these two errors?
A. 2020 net income and December 31, 2020
B. 2019 net income is overstated by P12,000 and 2020 net income is understated by P9,000
C. 2019 net income and December 31, 2019 accumulated profits are understated by P21,000 each.
D. 2020 net income is understated by P30,000 and January 1, 2021 accumulated profits is understated by P9,000
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