### Understanding the Impact of Ending Inventory Errors**Question:**Which of the following is *not* affected by an error related to ending inventory?#### Answer Choices:- Sales- Net Income- Current Assets- Gross Profit- Cost of Goods Sold### Explanation:Ending inventory errors can impact several key financial metrics, but not all aspects of financial statements are affected. The provided options examine key areas:1. **Sales:** Sales revenue measures the total income generated from goods sold or services provided. It is recorded based on transaction records and is not directly influenced by the ending inventory value.2. **Net Income:** An error in ending inventory affects the cost of goods sold, which subsequently affects the net income. 3. **Current Assets:** Inventory is classified under current assets on the balance sheet. An error in ending inventory valuation directly impacts the value of current assets.4. **Gross Profit:** Gross profit is calculated as sales revenue minus the cost of goods sold (COGS). Since ending inventory errors affect COGS, they also influence gross profit.5. **Cost of Goods Sold:** COGS is computed by adding beginning inventory and purchases during the period, then subtracting ending inventory. An error in ending inventory directly impacts the COGS calculation.Correct Answer: **Sales**Sales are not affected by errors related to ending inventory.

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Answered: Which of the following is not affected…

Which of the following is not affected by an error related to ending inventory? Multiple Choice O Sales. O O Net income. O Current assets. O Gross profit. Cost of goods sold.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

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