Question
You have been asked to audit thefinancial statementsof Young Company for two consecutive years. After examining the accounting records, you determine the following:Ending inventoryin Year
You have been asked to audit thefinancial statementsof Young Company for two consecutive years. After examining the accounting records, you determine the following:Ending inventoryin Year 1 is overstated by $7,000
- Ending inventory in Year 2 is overstated by $4,300
Required:
Ignoring income taxes, what effect will the errors have onnet incomefor each of Year 1 and Year 2?
Net Income - Year 1: Is the item overstated or understated?
What is the amount of error?
Net Income -Year 2: Is the item overstated or understated? What is the amount of error?
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Payroll Accounting 2019
Authors: Jeanette Landin, Paulette Schirmer
5th edition
125991707X, 978-1259917073
