Chapter 6, Problem 8DQ

(a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To state: any overstatement or understatement of gross profit due to inventory error.

(b)

To determine

To state: any overstatement or understatement of items in balance sheet due to inventory error.