Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 net income and 2021 net income. 20202021a. Equipment (with a useful life of 5 years) was purchased and expensed in 2018.b. Wages payable were not recorded at 12/31/20.c. Equipment purchased in 2020 was expensed.d. 2020 ending inventory was overstated.e. Patent amortization was not recorded in 2021.__________________________________________________

Net Income:The net income is the excess of revenues over expenses after adjusting for depreciation…

Answered: Indicate the effect—Understate,…

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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Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 net income and 2021 net income.

	2020	2021
a. Equipment (with a useful life of 5 years) was purchased and expensed in 2018. b. Wages payable were not recorded at 12/31/20. c. Equipment purchased in 2020 was expensed. d. 2020 ending inventory was overstated. e. Patent amortization was not recorded in 2021.	_____ _____ _____ _____ _____	_____ _____ _____ _____ _____

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