18. A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end. This merchandise was omitted from the year end physical count. How will these errors affect assets, liabilities, and stockholders' equity at year end and profit for the year? Shareholders' Equity Overstate Understate No effect Profit Overstate Assets No effect No effect Understate Liabilities Understate А. В. Overstate Understate No effect Understate С. Understate D. Understate No effect Understate

18. A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end. This merchandise was omitted from the year end physical count. How will these errors affect assets, liabilities, and stockholders' equity at year end and profit for the year? Shareholders' Equity Overstate Understate No effect Profit Overstate Assets No effect No effect Understate Liabilities Understate А. В. Overstate Understate No effect Understate С. Understate D. Understate No effect Understate

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Description: 18. A company using a periodic inventory system neglected to record a purchase ofmerchandise on account at year-end. This merchandise was omitted from theyear end physical count. How will these errors affect assets, liabilities, andstockholders' equ

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 17E: Errors A company that uses the periodic inventory system makes the following errors: 1. It omits a...

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Which of the following financial statements would be impacted by a current-year ending inventory error, when using a periodic inventory updating system? A. balance sheet B. income statement C. neither statement D. both statements
The following are independent errors made by a company that uses a periodic inventory system: a. failure to record a purchase of inventory on credit (however, inventory was properly counted at the end of the period) b. expensing the purchase of a machine c. failure to accrue wages d. failure to record an allowance for uncollectibles e. including collections in advance as revenue f. including payments in advance as expenses g. failure to accrue warranty costs h. discount on a note payable issued for purchase of a machine is ignored i. failure to record depreciation expense on assets purchased during the year Required: Next Level Indicate the effect of each of the preceding errors on the companys assets, liabilities, shareholders equity, and net income in the year in which the error occurs. State whether the error causes an overstatement (+), an understatement (), or no effect (NE).
Errors A company that uses the periodic inventory system makes the following errors: 1. It omits a purchase on credit from the purchases account and the ending inventory. 2. It omits a purchase on credit from the purchases account, but the ending inventory is correct. 3. It overstates the ending inventory, but purchases arc correct. Required: Indicate the effect of the preceding errors on the income statement and the balance sheet of the current and succeeding years.
If a group of inventory items costing $3,200 had been double counted during the year-end inventory count, what impact would the error have on the following inventory calculations? Indicate the effect (and amount) as either (a) none, (b) understated $______, or (c) overstated $______. Table 10.2
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18. The accountant for the Fred Company did not record a purchase of merchandise on credit or include the items in the ending inventory. The effect of these omissions on assets, liabilities, and retained earnings would be (assume a periodic inventory system): Assets Liabilities Retained Earnings Understate Understate Understate а. b. Understate Understate No effect No effect d. Understate Understate No effect с. No effect Understate
Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error? Da. Gross profit is understated. Ob. Owner's equity is overstated. Oc. Net income is understated. Od. Cost of merchandise sold is overstated.
Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error? Oa. Net income is understated. Ob. Net income is overstated. Dc. Merchandise inventory reported on the balance sheet is overstated. d. Cost of merchandise sold is understated.
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