For questions 1-6, the company uses a periodic inventory accounting system. The

Question

For questions 1-6, the company uses a periodic inventory accounting system. The analysis of the data collected from the observation of the inventory physical count indicates that some of the company's inventories were double counted.

For questions 7-12, the company uses a perpetual inventory accounting system. Marketing and freight-out costs were capitalized to inventory produced during the year. Some of the inventory produced during the year was in ending inventory.

For each of the question numbers below state whether it was understated, overstated, or there was no effect.

1. Cash
2. Inventory
3. Cost of Goods Sold
4. Liabilities
5. Sales and Marketing Expenses
6. Net Income
7. Cash
8. Inventory
9. Net Income
10. Liabilities
11. Sales and Marketing Expenses
12. Retained Earnings

Explanation / Answer

Effect cash No effect Inventory Overstated COGS Understated Liabilities No effect Sales and Marketing Expenses no effect net income overstated cash no effect Inventory Overstated Net income overstated liabilities no effect Sales and Marketing Expenses understated Retained earnings overstated

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.