192 AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? Cost of goods sold Income before taxes Retained earnings What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much? Cost of goods sold Income before taxes Retained earnings What will happen when AM Beauty ultimately corrects its physical inventory count?
192 AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows:
2026 2025
Ending inventory $12,000 overstated $25,000 overstated
What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much?
- Cost of goods sold
- Income before taxes
Retained earnings
What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much?
- Cost of goods sold
- Income before taxes
- Retained earnings
- What will happen when AM Beauty ultimately corrects its physical inventory count?
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