The accountant for Angie Company made the following errors related to purchases of merchandise and ending inventory in 2016: 1. A $2,200 purchase of merchandise on credit was not recorded or included in ending inventory. 2. A $3,180 purchase of merchandise on credit was recorded, but it was inadvertently omitted from the end-of-year physical inventory count. Assuming a periodic inventory system, Angie's Company's 2016 net income will be a. overstated by $5,380. b. overstated by $3,180. c. understated by $2,380. d. understated by $3,180.
The accountant for Angie Company made the following errors related to purchases of merchandise and ending inventory in 2016: 1. A $2,200 purchase of merchandise on credit was not recorded or included in ending inventory. 2. A $3,180 purchase of merchandise on credit was recorded, but it was inadvertently omitted from the end-of-year physical inventory count. Assuming a periodic inventory system, Angie's Company's 2016 net income will be a. overstated by $5,380. b. overstated by $3,180. c. understated by $2,380. d. understated by $3,180.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The accountant for Angie Company made the following errors related to purchases of merchandise and ending inventory in 2016:
|
1. |
A $2,200 purchase of merchandise on credit was not recorded or included in ending inventory. |
|
2. |
A $3,180 purchase of merchandise on credit was recorded, but it was inadvertently omitted from the end-of-year physical inventory count. |
Assuming a periodic inventory system, Angie's Company's 2016 net income will be
a. overstated by $5,380.
b. overstated by $3,180.
c. understated by $2,380.
d. understated by $3,180.
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