17.11 The accountant at Investotech discovered the following errors after calculating the company's profit for 20X3: (a) A non-current asset costing $50,000 has been included in the purchases account Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expenses (b) What is the effect of these errors on gross profit and net profit? Understatement of gross profit by $40.000 and understatement of net profit by $30,000 Understatement of both gross profit and net profit by $40,000 Understatement of gross profit by $60.000 and understatement of net profit by $50,000 C

17.11 The accountant at Investotech discovered the following errors after calculating the company's profit for 20X3: (a) A non-current asset costing $50,000 has been included in the purchases account Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expenses (b) What is the effect of these errors on gross profit and net profit? Understatement of gross profit by $40.000 and understatement of net profit by $30,000 Understatement of both gross profit and net profit by $40,000 Understatement of gross profit by $60.000 and understatement of net profit by $50,000 C

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 14PA: Assuming a companys year-end inventory were overstated by $5,000, indicate the effect...

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Problem 10 Indicate the effects of the following errors on cost of goods sold and net income. 1. Beginning inventory is understated by $10,000. 2. Ending inventory is overstated by $25,000. 3. Beginning inventory is overstated by $30,000 and ending inventory is understated by $10,000. nsidov 4. Ending inventory is understated by $5,000 and beginning inventory is understated by $5,000.
If ending inventory is understated by $25,000, what effect will this have on cost of goods sold and net income? a.Cost of goods sold is overstated by $25,000, and net income is understated by $25,000. b.Cost of goods sold is understated by $25,000, and net income is understated by $25,000. c.Cost of goods sold is understated by $25,000, and net income is overstated by $25,000. d.Cost of goods sold is overstated by $25,000, and net income is overstated by $25,000.
Assume that the ending inventory of a merchandising firm is overstated by $40,000. a. By how much and in what direction (overstated or understated) will the firms cost of goods be misstated? b. If this error is not corrected, what effect will it have on the subsequent period's operating income? c. If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subsequent period) combined?
21. An employee accidentally overstated the year’s advertising expense by $50,000. Which of the following statement is correct regarding the consequence of this error? Multiple Choice a)Cost of goods manufactured (COGM) will be overstated by $50,000 B) Both COGM and COGS will be overstated by $50,000. c)Cost of goods sold (COGS) will be overstated by $50,000 d)COGS will be overstated by $50,000 and COGM will be understated by $50,000 e)None of the answers provided is correct
7. Reversais or inventory write-downs may exceed he amountor the original write-down previously recognized. The cost of factory management is included in the cost of 8. inventory. 9. The maintenance costs of a machine used in the manufacturing process are not included in the cost of inventories 10. If the cost of an inventory is P8 while its net realizable value is P6, the amount of write-down is P2. PROBLEM 2: MULTIPLE CHOICE 1. Which of the following is not included as part of the cost of an inventory? a. Purchase cost, net of trade discount b. Direct labor cost c. Freight in d. Selling cost NOT FOR SALE! All rights belongs to respective authors. Please consider buving the original copv. 166 PAS2 2. Conversion costs do not include which of the following costs? c. Production d. All of these are included a. Direct materials b. Direct labor 3. These deal with the computation of cost of sales and cost of ending inventory. a. net realizable value b. perpetual inventory system d. costing…
3. Childish Company has a cost card in relation to an inventory: 700,000 180,000 Materials Storage costs of finished goods Delivery to customers Irrecoverable purchase taxes 40,000 60,000 330,000 120,000 100,000 50,000 Production labor costs Production overheads General administration costs Marketing costs At what figure should the inventory be measured? a. 1,220,000 b. 1,210,000 c. 2,120,000 d. 1,120,000
Return to Required information [The following information applies to the questions displayed below.] Finion Upholstery, Inc., uses a job-order costing system to accumulate manufacturing costs. The company's work-in- process on December 31, 20x1, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date. Finion applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow. Direct material used Direct labor $ 5,550,000 4,350,000 64,000 2,860,000 Indirect material used: Indirect labor Factory depreciation. Factory insurance 1,740,000 57,000 830,000 Factory utilities Selling and administrative…
An error in the physical count of goods on hand at the end of a period resulted in a $18,000 overstatement of the ending inventory. The effect of this error in the current period is Cost of Goods Sold Net Income Understated Overstated Understated Understated Overstated Overstated Overstated Understated
Assuming a companys year-end inventory were overstated by $5,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: Equity
Assuming a companys year-end inventory were understated by $16,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: Equity
If Barcelona Companys ending inventory was actually $122,000, but the cost of consigned goods, with a cost value of $20,000 were accidentally included with the company assets, when making the year-end inventory adjustment, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?
If a group of inventory items costing $3,200 had been double counted during the year-end inventory count, what impact would the error have on the following inventory calculations? Indicate the effect (and amount) as either (a) none, (b) understated $______, or (c) overstated $______. Table 10.2