10- An item of inventory was purchased for SR500. It is expected to be sold for SR700 although SR250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost SR620. At what value should this item of inventory be included in the financial statements? SR500 SR700 SR620 SR450 a) b) c) d) 11- If ending inventory is overvalued: a) Assets are overstated in the statement of financial position. b) Assets are understated in the statement of financial position. c) Profit is understated in the statement of profit or loss (as cost of sales is too high). d) There is no impact on either statement of financial position or statement of profit or loss.

10- An item of inventory was purchased for SR500. It is expected to be sold for SR700 although SR250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost SR620. At what value should this item of inventory be included in the financial statements? SR500 SR700 SR620 SR450 a) b) c) d) 11- If ending inventory is overvalued: a) Assets are overstated in the statement of financial position. b) Assets are understated in the statement of financial position. c) Profit is understated in the statement of profit or loss (as cost of sales is too high). d) There is no impact on either statement of financial position or statement of profit or loss.

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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K25.
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