FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The accountant for Suzanne Company made the following errors related to inventory in 2020:
1. |
The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count. |
2. |
A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory. |
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?
Set |
Cost of Goods Sold |
Gross Profit |
Net Income |
I. |
Overstated |
Understated |
Understated |
II. |
Overstated |
Understated |
No effect |
III. |
Understated |
Overstated |
Overstated |
IV. |
No effect |
No effect |
No effect |
|
a. |
Set I |
|
b. |
Set II |
|
c. |
Set III |
|
d. |
Set IV |
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