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At December 31, 2012, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2012? a. Overstates cost of goods sold and understates net income b. Understates cost of goods sold and overstates net income c. Leaves both cost of goods sold and net income correct because the errors cancel each other d. Overstates both cost of goods sold and net income

At December 31, 2012, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2012? a. Overstates cost of goods sold and understates net income b. Understates cost of goods sold and overstates net income c. Leaves both cost of goods sold and net income correct because the errors cancel each other d. Overstates both cost of goods sold and net income

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At December 31, 2012, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2012? a. Overstates cost of goods sold and understates net income b. Understates cost of goods sold and overstates net income c. Leaves both cost of goods sold and net income correct because the errors cancel each other d. Overstates both cost of goods sold and net income
Transcribed Image Text:At December 31, 2012, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2012? a. Overstates cost of goods sold and understates net income b. Understates cost of goods sold and overstates net income c. Leaves both cost of goods sold and net income correct because the errors cancel each other d. Overstates both cost of goods sold and net income
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