Use the following information to answer the next four (4) items Based on your audit of the financial statements of Rangers Company, the following omissions were discovered: 2019 2020 Prepaid expense 24,000 18,000 Unearned income 10,00 12,000 Accrued expense 13,000 14,000 Accrued income 22,000 25,000 You discovered further that an enhancement made on a machinery on January 2, 2019 for P500,000 was charged to expense. The remaining useful life of the machinery on December 31, 2020 is 3 years. What is the net effect of the errors on the 2019 net income? Select the correct response: Overstatement of P77,000 Understatement of P523,000 Understatement of P423,000 Overstatement of P323,000

Use the following information to answer the next four (4) items Based on your audit of the financial statements of Rangers Company, the following omissions were discovered: 2019 2020 Prepaid expense 24,000 18,000 Unearned income 10,00 12,000 Accrued expense 13,000 14,000 Accrued income 22,000 25,000 You discovered further that an enhancement made on a machinery on January 2, 2019 for P500,000 was charged to expense. The remaining useful life of the machinery on December 31, 2020 is 3 years. What is the net effect of the errors on the 2019 net income? Select the correct response: Overstatement of P77,000 Understatement of P523,000 Understatement of P423,000 Overstatement of P323,000

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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Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

Use the following information to answer the next four (4) items
Based on your audit of the financial statements of Rangers Company, the
following omissions were discovered:
2019
2020
Prepaid expense
24,000
18,000
Unearned income
10,000
12,000
Accrued expense
13,000
14,000
Accrued income
22,000
25,000
You discovered further that an enhancement made on a machinery on January 2,
2019 for P500,000 was charged to expense. The remaining useful life of the
machinery on December 31, 2020 is 3 years.
What is the net effect of the errors on the 2019 net income?
Select the correct response:
Overstatement of P77,000
Understatement of P523,000
Understatement of P423,000
Overstatement of P323,000

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