Asked by Judith Parsons on May 21, 2024
Verified
An error in the physical count of goods on hand at the end of a period resulted in a $18000 overstatement of the ending inventory. The effect of this error in the current period is Cost of Goods Sold Net Incom \begin{array}{cc} \text { Cost of Goods Sold } & \text { Net Incom } \\\end{array} Cost of Goods Sold Net Incom
A) Understated Understated \begin{array}{cc} \text { Understated } && \text { Understated } \\\end{array} Understated Understated
B) Over stand Over stand \begin{array}{cc} \text { Over stand } &&& \text { Over stand } \\\end{array} Over stand Over stand
C) Understated Over stand \begin{array}{cc} \text { Understated } &&& \text { Over stand } \\\end{array} Understated Over stand
D) Over stand Understated \begin{array}{cc} \text { Over stand } &&& \text { Understated } \\\end{array} Over stand Understated
Physical Count
The actual tallying of inventory goods a company has on hand to verify stock levels and assess the need for adjustment in accounting records.
Ending Inventory
The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.
Cost Of Goods Sold
Expenses directly tied to the production process of goods a company markets.
- Understand the impact of inventory errors on financial statements.
Verified Answer
Learning Objectives
- Understand the impact of inventory errors on financial statements.
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