A firm recorded it's ending inventory for the previous year at $40,000. It realized at the end of the first quarter of the current year that the number was misstated and should actually be $30,000. What corrective entries need to occur to ensure net income is not affected at the end of the current year? There are no corrections to be made. The firm should account for the misstated inventory in a separate cost of goods sold entry. There is no way to fix the entry and the net income will remain affected. The firm should account for the misstated inventory at the end of the current year.
A firm recorded it's ending inventory for the previous year at $40,000. It realized at the end of the first quarter of the current year that the number was misstated and should actually be $30,000. What corrective entries need to occur to ensure net income is not affected at the end of the current year? There are no corrections to be made. The firm should account for the misstated inventory in a separate cost of goods sold entry. There is no way to fix the entry and the net income will remain affected. The firm should account for the misstated inventory at the end of the current year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A firm recorded it's ending inventory for the previous year at $40,000. It realized at the end of the first quarter of the current year that the number was misstated and should actually be $30,000. What corrective entries need to occur to ensure net income is not affected at the end of the current year?
There are no corrections to be made.
The firm should account for the misstated inventory in a separate cost of goods sold entry.
There is no way to fix the entry and the net income will remain affected.
The firm should account for the misstated inventory at the end of the current year.
Expert Solution
Step 1
Golden Rules of Accounting:
|
Account |
Debit |
Credit |
|
Personal Accounts |
The Receiver |
The Giver |
|
Real Accounts |
What comes in |
What goes out |
|
Nominal Accounts |
All Expenses and Losses |
All Incomes and Gains |
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