For each of the following inventory errors occurring in 2021, determine the effect of the error on 2021's cost of goods sold, net income,and retained earnings using understated (U), overstated (O), or no effect (NE). Assume that the error is not discovered until 2022 andthat a periodic inventory system is used. Ignore income taxes.Cost of GoodsSoldRetainedNet IncomeEarnings1.Overstatement of ending inventoryU2.Overstatement of purchases3.Understatement of beginning inventory4.Freight-in charges are understated5Understatement of ending inventory6.Understatement of purchases7.of beginning inventory8.Understatement of purchases plus understatement of ending inventory by the same amount

The entire amount your organization spent as a cost directly tied to the selling of merchandise is…

For each of the following inventory errors occurring in 2021, determine the effect of the error on 2021's cost of goods sold, net income, and retained earnings using understated (U), overstated (O), or no effect (NE). Assume that the error is not discovered until 2022 and that a periodic inventory system is used. Ignore income taxes. Cost of Goods Retained Net Income Sold Earnings 1. Overstatement of ending inventory U 2. Overstatement of purchases 3. Understatement of beginning inventory 4. Freight-in charges are understated 5. Understatement of ending inventory 6 Understatement of purchases 7. Overstatement of beginning inventory 8. Understatement of purchases plus understatement of ending inventory by the same amount

For each of the following inventory errors occurring in 2021, determine the effect of the error on 2021's cost of goods sold, net income, and retained earnings using understated (U), overstated (O), or no effect (NE). Assume that the error is not discovered until 2022 and that a periodic inventory system is used. Ignore income taxes. Cost of Goods Retained Net Income Sold Earnings 1. Overstatement of ending inventory U 2. Overstatement of purchases 3. Understatement of beginning inventory 4. Freight-in charges are understated 5. Understatement of ending inventory 6 Understatement of purchases 7. Overstatement of beginning inventory 8. Understatement of purchases plus understatement of ending inventory by the same amount

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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1. In 2021, Jules Company realized that its ending inventory was understated by P1,500 in 2019. How should Jules Company handle this? a. An adjustment to reduce inventory by P1,500 needs to be made b. An adjustment to increase cost of goods sold by P1,500 needs to be made. c. An adjustment to increase inventory by P1,500 needs to be made d. No adjustment needs to be made. 2. For interim reporting, a gain on disposal of land occurring in the third quarter is a. Recognized and allocated over the quarters b. Recognized and allocated over four quarters c. Recognized immediately in the third quarter d. Deferred until the annual reporting
Assuming the current ratio equals 2, which of the following would cause the current ratio to increase? O Accrual for payroll. Declaration of cash dividend. O Payment for inventory purchased on account. O Inventory purchased on account.
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