Requirements: Determing the effect of the errors to the following:1. 20x2 net income2. 20x3 net income3. 20x4 net income4. 20x4 retained earnings, beginning5. 20x4 retained earnings, ending6. 20x4 working capital Problem 2: (Concepts in Correction of errors) You have been engaged to audit the accounts of ABC Company for the first timein 20x4. During the audit you discovered the following information.Year ending December 31Omission of:Accrued expensesAccrued income20X220X320X4P15,0008,00016,00011,0001,0002,0001,500P7,0009,00012,00013,000P22,0005,0006,00010,000ab.Prepaid expensesd.с.Unearned incomeBeginning inventoryf.е.Ending inventoryBad debt expensesg.Cash dividend payableRequirements: Determine the effect of the errors to:h.5001.20X2 Net Income2.20X3 Net Income3.20X4 Net Income20X4 Retained Earnings, Beginning20X4 Retained Earnings, Ending+. 20X4 Working Capital4.5.

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Description: Requirements: Determing the effect of the errors to the following:1. 20x2 net income2. 20x3 net income3. 20x4 net income4. 20x4 retained earnings, beginning5. 20x4 retained earnings, ending6. 20x4 working capital Problem 2: (Concepts in Correction of

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Business

Accounting

1. 20x2 net income 2. 20x3 net income 3. 20x4 net income

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Requirements: Determing the effect of the errors to the following:

1. 20x2 net income
2. 20x3 net income
3. 20x4 net income
4. 20x4 retained earnings, beginning
5. 20x4 retained earnings, ending
6. 20x4 working capital

Problem 2: (Concepts in Correction of errors) You have been engaged to audit the accounts of ABC Company for the first time
in 20x4. During the audit you discovered the following information.
Year ending December 31
Omission of:
Accrued expenses
Accrued income
20X2
20X3
20X4
P15,000
8,000
16,000
11,000
1,000
2,000
1,500
P7,000
9,000
12,000
13,000
P22,000
5,000
6,000
10,000
a
b.
Prepaid expenses
d.
с.
Unearned income
Beginning inventory
f.
е.
Ending inventory
Bad debt expenses
g.
Cash dividend payable
Requirements: Determine the effect of the errors to:
h.
500
1.
20X2 Net Income
2.
20X3 Net Income
3.
20X4 Net Income
20X4 Retained Earnings, Beginning
20X4 Retained Earnings, Ending
+. 20X4 Working Capital
4.
5.

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