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Error(a) Error(b) Over- Under- Over- Under- stated stated stated Stated Revenue for the year 1. would be $- $- $- Expenses for the year 2. would be $- $- Net income for the year 3. would be $- $- Assets at July 31 would 4. be $- $- $- $- Liabilities at July 31 5. would be $- Owner's equity at July 31 6. would be $- $- $- $-

Error(a) Error(b) Over- Under- Over- Under- stated stated stated Stated Revenue for the year 1. would be $- $- $- Expenses for the year 2. would be $- $- Net income for the year 3. would be $- $- Assets at July 31 would 4. be $- $- $- $- Liabilities at July 31 5. would be $- Owner's equity at July 31 6. would be $- $- $- $-

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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Effects of errors on financial statements
The accountant for Healthy Life Company, a medical services consulting
firm, mistakenly omitted adjusting entries for (a) unearned revenue

earned during the year ($34,900) and (b) accrued wages ($12,770).
Indicate the effect of each error, considered individually, on the income
statement for the current year ended July 31. Also indicate the effect of

each error on the July 31 balance sheet. Set up a table similar to the
following, and record your answers by inserting the dollar amount in the
appropriate spaces. Insert a zero if the error does not affect the item.

Error(a) Error(b) Over- Under- Over- Under- stated stated stated Stated Revenue for the year 1. would be $- $- $- Expenses for the year 2. would be $- $- Net income for the year 3. would be $- $- Assets at July 31 would 4. be $- $- $- $- Liabilities at July 31 5. would be $- Owner's equity at July 31 6. would be $- $- $- $-
Transcribed Image Text:Error(a) Error(b) Over- Under- Over- Under- stated stated stated Stated Revenue for the year 1. would be $- $- $- Expenses for the year 2. would be $- $- Net income for the year 3. would be $- $- Assets at July 31 would 4. be $- $- $- $- Liabilities at July 31 5. would be $- Owner's equity at July 31 6. would be $- $- $- $-
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