Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In taking a physical inventory at the end of year 2013, Grant Company forgot to count certain units. Indicate how this error affects the following:

In taking a physical inventory at the end of year 2013, Grant Company forgot to count certain units. Indicate how this error affects the following:

(a) 2013 cost of goods sold.
Overstates 2013 cost of goods sold.
Understates 2013 cost of goods sold.
None of the above.

(b) 2013 gross profit.
Understates 2013 gross profit.
Overstates 2013 gross profit.
None of the above.

(c) 2013 net income.
Understates 2013 net income.
Overstates 2013 net income.
None of the above.

(d) 2014 net income.
Understates 2014 net income.
Overstates 2014 net income.
None of the above.

(e) The combined two-year income.
The understated 2014 net income and the overstated 2013 net income combine to yield a correct total income for the two-year period.
The understated 2013 net income and the overstated 2014 net income combine to yield a correct total income for the two-year period.

(f) Income for years after 2014.
The 2013 error will affect years after 2014.
The 2013 error will not affect years after 2014.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Mantras Forensic Accounting Important Standards On Auditing

Authors: Buffy Mielcarek

1st Edition

B09PP4SKL1, 979-8796281437

More Books

Students also viewed these Accounting questions