Requirement: Complete the schedule below by entering an Q to indicate overstatement, a U to indicate understatement, and NE if no effect.
Requirement: Complete the schedule below by entering an Q to indicate overstatement, a U to indicate understatement, and NE if no effect.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:PROBLEM 1: Identifying effects of common errors
Requirement: Complete the schedule below by entering an Q to indicate overstatement, a I to
indicate understatement, and NE if no effect.
Effect of Error On:
Net income Assets Liabilities Capital
a. Ending inventory for 2020 understated:
2020 financial statements
2021 financial statements
b. Ending inventory for 2021 overstated:
2020 financial statements
2021 financial statements
c. Failed to record depreciation in 2020:
2020 financial statements
2021 financial statements
d. Failed to record accrued salaries payable in
2020:
2020 financial statements
2021 financial statements
e. Overstatement of accrued rent revenue in 2020:
2020 financial statements
2021 financial statements
f. Failed to record a liability resulting from
revenue collected in advance at end of 2020;
instead, credited revenue in full erroneously:
2020 financial statements
2021 financial statements
g. Failed to record an asset resulting from
expenses paid in advance at end of 2020;
instead, debited expenses in full erroneously:
2020 financial statements
2021 financial statements
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