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

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

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

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?
Assets
No effect
Liabilities
Understate
Shareholders' Equity
Overstate
Profit
Overstate
А.
Understate
No effect
Understate
No effect
Understate
В.
No effect
Overstate
С.
Understate
Understate
D.
Understate
No effect
Understate

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