Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years. With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year. To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

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Answer 1

Question

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

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Answer 2

Question

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

Expert Solution & Answer

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Answer 3

Question

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

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Answer 4

Question

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

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Answer 5

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

Answer 6

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

Answer 7

Chapter 6, Problem 20QS

To determine

Effect of under-valuation of inventory on the various financial items: Where Inventory valuation is understated then this will effect the various financial items. The Under-valuation of Inventory will have an effect on the gross profit of current year, cost of goods sold of the current year, net income of the current year and later years.

With the Under-statement of inventory, the cost of goods sold shall be overstated and income of the current year get under-stated. However, the ending inventory of the current year will be the beginning inventory of the next year, which will have corresponding reverse effect of it on the next year cost of goods sold and net income of the next year.

To determine: The effect of Under-valuation of ending inventory on the incomes and cost of goods sold of the current year and next year.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 6 - Prob. 1DQ Ch. 6 - 2. Where is the amount of merchandise inventory...Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - What does the full disclosure principle prescribe...Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - What is the meaning of market as it is used in...

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