Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions. I. Goods valued at P 11,000 are on consignment with a customer. These goods are not included in the P76,050 inventory figure. Which of the following statements is true? a. There is no effect on the 2021 ending inventory. b. 2021 ending inventory is overstated. c. The 2021 net income is overstated. d. The 2021 net income is understated. Please included an explaination.
Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions. I. Goods valued at P 11,000 are on consignment with a customer. These goods are not included in the P76,050 inventory figure. Which of the following statements is true? a. There is no effect on the 2021 ending inventory. b. 2021 ending inventory is overstated. c. The 2021 net income is overstated. d. The 2021 net income is understated. Please included an explaination.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.
I. Goods valued at P 11,000 are on consignment with a customer. These goods are not included in the P76,050 inventory figure. Which of the following statements is true?
a. There is no effect on the 2021 ending inventory.
b. 2021 ending inventory is overstated.
c. The 2021 net income is overstated.
d. The 2021 net income is understated.
Please included an explaination.
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