Question
How the following independent errors will affect net income on the income statement and the shareholders' equity section of the statement of financial position(SFP) using
How the following independent errors will affect net income on the income statement and the shareholders' equity section of the statement of financial position(SFP) using the symbol + (plus) for overstated, -(minus) For understated, and Zero for no effect.
2019 2020
Scenario Income Balance Income Balance
Statement Sheet(SFP) Statement Sheet(SFP)
Example: Ending 2019
inventory overstated. + + - 0
1.Failure to accrue 2019
interest revenue
2.A capital expenditure for
factory equipment(useful
life, 5 years) was charged
to expense in error in 2019
3.Failure to accrue 2019
wages
4.Ending inventory in 2019
understated
5.overstated 2019 depreciation
expense; 2020 expense correct
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Horngrens Cost Accounting A Managerial Emphasis
Authors: Srikant M. Datar, Madhav V. Rajan, Louis Beaubien
8th Canadian Edition
134453735, 9780134824680, 134824687, 9780134733081 , 978-0134453736
