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3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e., whether 'understatement or overstatement'. T each item independently of the other items and assume a periodic inventory system. Nature of error Effect of error on: Gross profit COGS a. Overstatement of beginning inventory b. Understatement of purchases c. Overstatement of purchase returns d. Understatement of purchase returns e. Overstatement of ending inventory f. Understatement of ending inventory

3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e., whether 'understatement or overstatement'. T each item independently of the other items and assume a periodic inventory system. Nature of error Effect of error on: Gross profit COGS a. Overstatement of beginning inventory b. Understatement of purchases c. Overstatement of purchase returns d. Understatement of purchase returns e. Overstatement of ending inventory f. Understatement of ending inventory

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter5: Accounting For Retail Businesses
Section: Chapter Questions
Problem 40E: Identify items missing in determining cost of goods sold For (a) through (e), identify the items...
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3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e., whether 'understatement or overstatement'. Treat each item independently of the other items and assume a periodic inventory system. Nature of error Effect of error on: Gross profit COGS a. Overstatement of beginning inventory b. Understatement of purchases c. Overstatement of purchase returns d. Understatement of purchase returns e. Overstatement of ending inventory f. Understatement of ending inventory
Transcribed Image Text:3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e., whether 'understatement or overstatement'. Treat each item independently of the other items and assume a periodic inventory system. Nature of error Effect of error on: Gross profit COGS a. Overstatement of beginning inventory b. Understatement of purchases c. Overstatement of purchase returns d. Understatement of purchase returns e. Overstatement of ending inventory f. Understatement of ending inventory
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