-8 Effects of inventory error Assume that the ending inventory of a merchandisinga2firm is overstated by $40,000.Required:a. By how much and in what direction (overstated or understated) will the firm'scost of goods sold be misstated?b. If this error is not corrected, what effect will it have on the subsequent period'soperating income?If this error is not corrected, what effect will it have on the total operatingincome of the two periods (the period in which there is an error and the subse-quent period) combined?с.

Introduction: Overstated: Stating the values more than actual values called as Overstated. Stating…

Answered: -8 Effects of inventory error Assume…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Exercise 9-7 (Algo) Effects of inventory error LO 2 If the ending inventory of a firm is overstated by $49,000, by how much and in what direction (overstated or understated) will the firm's operating income be misstated? (Hint: Use the cost of goods sold model, enter hypothetically "correct" data, and then reflect the effects of the ending inventory error and determine the effect on cost of goods sold.) Operating income by overstated understated
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24.Which of the following is not a potential consequence of carrying insufficient inventory to meet the day to day needs of the business? A Breaks in production due to lack of raw materials B Cost savings on ordering inventory at short notice C Loss of customer goodwill D Missed opportunity to make sales
Problem 8. * Alfred Company measured inventory at the lower of cost and net realizable value. BTS TWICE 240,000 188,000 360,000 250,000 48,000 50,000 208,000 168,000 25% 25% Historical cost Selling Price Est. cost to complete Replacement cost Profit margin What is the measurement of the inventory? Your answer EXO 300,000 360,000 68,000 318,000 10%
A firm utilizes a periodic inventory cost system with a Last-In, First-Out (LIFO) cost flow assumption. What does the firm report as the lower of cost or market for the following two items? Item A Item B Costs to have inventory ready for sale $4 $0 Current Cost to Replace $50 $55 Estimated Selling Price $62 $70 Estimated Normal Profit Margin $12 $12 Cost per the accounting record $60 $60 Group of answer choices Item A: $46, Item B: $55 Item A: $46, Item B: $58 Item A: $46, Item B: $60 Item A: $50, Item B: $55 Item A: $50, Item B: $58
B-Marts' large proportion of merchandise held on consignment from suppliers. Which account balance assertion for inventory would this cause to be most at risk? Select one: a.Presentation. b.Cut-off . c.None of the given answers is correct. d.Existence.
QUESTION 15 During a period when inventory costs are steadily increasing, which of the following is true? O a. Net income will be higher under LIFO than under FIFO. O b. Cost of goods sold will be lower under LIFO than under FIFO. O c. Ending inventory value will be higher under LIFO than under FIFO. O d. Income taxes will be lower under LIFO than under FIFO.
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Effect of the error # 4 for the year 2019 Answer the ff: O-Overstated U-Understated X-No effect Purchases Cost of Sales Net income Inventory Accounts Payable RE before closing RE after closing
If the ending inventory of a firm is overstated by $56,000, by how much and in what direction (overstated or understated) will the firm's operating income be misstated? (Hint: Use the cost of goods sold model, enter hypothetically "correct" data, and then reflect the effects of the ending inventory error and determine the effect on cost of goods sold.) Operating income by
If annually your company spends significantly more on inventory holding costs than order costs, it is likely that you are: 1. Ordering in quantities that are too large II. Carrying too much inventory I only O II only Both I and II Neither I nor II

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