Answered: A situation where physical inventory is…

A situation where physical inventory is valued less than book inventory is referred to as a: A) Shortage. B) Overage. C) Net markdowns. D) Cancellation.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 18CYBK

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An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an overstatement of net income. b. an overstatement of COGS and an overstatement of net income. c. an understatement of COGS and an understatement of net income. d. an overstatement of COGS and an understatement of net income.
If a misstatement of inventory occurs, the net income for-----periods will be misstated
If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except: A. Cost of goods sold. B. Gross profit. C. Net sales. D. Current assets. E. Net income.
Which of the following is not affected by an error related to ending inventory? Multiple Choice O O O O O Sales. Net income. Current assets. Gross profit. Cost of goods sold.
Which of the following is not a reason for the physical inventory count to differ from what isrecognized on the company’s books?A. mismanagementB. shrinkageC. damageD. sale of services to customers
Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a. LIFO. b. FIFO. c. Average cost. d. Specific identification
During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory? Da. FIFO method b. LIFO method c. average cost method d. Cannot tell without more information.
Describe the effects of misstatement of ending inventory.
Which of the following, if compared to the other methods for valuing inventory, has a material difference? A. LIFO B: FIFO C: Weighted Average D: Specific Identification.
How are errors in inventory between physical counts and the perpetual impact the income statement? O O O O A. An inventory shortage in Inventory reduces cost of goods sold. B. A shortage in physical counts reduces current assets. C. A shortage in Inventory increases the cost of goods sold. D. A shortage in inventory increases net income.
Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending inventory increase cost of goods sold and increase ending inventory increase cost of goods sold and decrease ending inventory have no effect on cost of goods sold and ending inventory
If the ending inventory is overstated, what is the effect on net income? a) Net income is overstated b) Net income is understated c) Net income is not affected d) Net income is reduced