Question
In finalizing its draft final accounts for the year ended 31 May 24Y7 and its draft balance sheet as at 31 May 24Y7, GHI Ltd
In finalizing its draft final accounts for the year ended 31 May 24Y7 and its draft balance sheet as at 31 May 24Y7, GHI Ltd found an error in the stock lists used to compute stock value as at 31 May 24Y7. The entry was:
Stock item | Number | Cost per unit | Total cost |
T123 | 95 | £3.80 | £361 |
Required: (a) What is incorrect about this entry? (b) Assess the impact of this error on: (i) the stock valuation as at 31 May 24Y7. (ii) the cost of goods sold for the year ended 31 May 24Y7. (iii) the net profit for the year ended 31 May 24Y7. (iv) the Owner’s Equity as at 31 May 24Y7.
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