Asked by Jenna Hallett on Apr 26, 2024
Verified
Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Year 1, fill in the items below, indicating which items will be understated(U), overstated(O), or correctly(C) stated for Year 1.
Ending Merchandise Inventory
The final value of goods available for sale at the end of an accounting period.
Overstated
An accounting term used when the reported value of a financial statement element is higher than its true value.
Understated
Describes an amount reported in financial statements that is less than the true, fair, or actual amount.
- Comprehend the impact of inaccuracies in inventory on financial reports.
- Evaluate the effects of inaccuracies in inventory valuation on the cost of goods sold and net income.
Verified Answer
RG
Learning Objectives
- Comprehend the impact of inaccuracies in inventory on financial reports.
- Evaluate the effects of inaccuracies in inventory valuation on the cost of goods sold and net income.