If the ending inventory is overstated by $10,000, which statement is true?a. Assets and Cost of Goods Sold are overstated.b. Assets and Cost of Goods Sold are understated.c. Assets and Net Income are overstated.d. Assets and Net Income are understated.

The correct answer is:c. Assets and Net Income are overstated. Explanation:Ending Inventory…

Answered: If the ending inventory is overstated…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 1CE: LO1 If the ending inventory is overstated by 10,000, indicate what, if anything, is incorrect about...

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Identify items missing in determining cost of goods sold For (a) through (e), identify the items designated by X and Y. A. Purchases (X + Y) = Net purchases B. Net purchases + X = Cost of inventory purchased C. Inventory (beginning) + Cost of inventory purchased = X D. Inventory available for sale X = Cost of inventory before estimated returns E. Cost of goods sold before estimated returns X = Cost of goods sold
Which of these statements is false? A. If cost of goods sold is incorrect, ending inventory is usually incorrect too. B. C. D.
Assuming a companys year-end inventory were overstated by $5,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: Equity
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
If ending inventory is understaffed for year 1, then in year 2…. A. Costa of goods sold and gross profit will both be overstated B. Costs of goods sold and gross profit will be understated C. Costs of goods sold will be overstated and gross profit will be understated D. Costs of food sold will be understated and gross profit will be overstated
If ending inventory is overstated in the current fiscal year, what effect will this have on net income for the next fiscal year? a.Net income would be understated. b.Net income would only be affected in the current fiscal year, and it would be understated. c.There would be no effect on net income. d.Net income would be overstated.
If ending inventory is understated by $25,000, what effect will this have on cost of goods sold and net income? a.Cost of goods sold is overstated by $25,000, and net income is understated by $25,000. b.Cost of goods sold is understated by $25,000, and net income is understated by $25,000. c.Cost of goods sold is understated by $25,000, and net income is overstated by $25,000. d.Cost of goods sold is overstated by $25,000, and net income is overstated by $25,000.
Suppose Ajax Corporation overstates its ending inventory amount. What effect will this have on the reported amount of cost of goods sold in the year of the error? a. Overstate cost of goods sold.b. Understate cost of goods sold.c. Have no effect on cost of goods sold.d. Not possible to determine with information given.
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.
If purchases were recorded correctly but ending physical inventory is understated, which one of the following situations occurs for the current year? a. Working capital is understated and net income is overstated b. Working capital and net income are understated c. Working capital is overstated and net income is understated. d. Working capital and net income are overstated.
4. Cost of goods sold is equal to a. total goods available for sale minus ending inventory. b. total goods available for sale plus beginning inventory . c. sum of ending inventory and cost of inventory charged to expense minus net purchases. d. net purchases minus ending inventory .
What is the effect on net income if a company failed ro record a purchase in transit (FOB shipping point) and also failed to include the purchase in physical inventory? a. Income is overstated b. Income is understated c. Income is correct d. Not enough information is provided to determine the answer

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If the ending inventory is overstated by $10,000, which statement is true? a. Assets and Cost of Goods Sold are overstated. b. Assets and Cost of Goods Sold are understated. c. Assets and Net Income are overstated. d. Assets and Net Income are understated.