For each of the following inventory errors occurring in 2018, determine the effect of the error on 2018's cost of goods sold, net profit, and retained earnings. Assume that the error is not discovered until 2019 and that a periodic inventory system is used. Ignore income taxes. U= Understated 0= Overstated NE = No effect Cost of Goods Net Retained Sold Income Earnings 1. Rent expense is understated 2. Overstatement of ending inventory

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…