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Fairfax Inc. began operations on January 1 , 2 0 1 9 . Financial statements for 2 0 1 9 and 2 0 2 0
Fairfax Inc. began operations on January Financial statements for and contained the following errors: Dec. Dec. Ending inventory $ too high $ too low Depreciation expense too high Insurance expense too low too high Prepaid insurance too high In addition, on December fully depreciated equipment was sold for $ but the sale was NOT recorded until No corrections have been made for any of the errors. Ignore income tax considerations. The total effect of the errors on Fairfax's net income is understated by $ overstated by $ overstated by $ understated by $
Fairfax Inc. began operations on January Financial statements for and contained the following errors:
Dec. Dec.
Ending inventory $ too high $ too low
Depreciation
expense
too high
Insurance expense too low too high
Prepaid insurance too high
In addition, on December fully depreciated equipment was sold for $ but the sale was NOT recorded until No
corrections have been made for any of the errors. Ignore income tax considerations.
The total effect of the errors on Fairfax's net income is
understated by $
overstated by $
overstated by $
understated by $
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