Asked by Bridget Stokes on Jul 04, 2024
Verified
Kim Company's accountant made the following errors related to merchandise inventory in 2010: 1. The begining inventory for 2010 was overstated by $1,900 \$ 1,900 $1,900 due to an error in the physical count.
2. A $1,150 \$ 1,150 $1,150 purchase of merchandise on credit was not recorded, but the items were included in the ending inventory.
Assuming a periodic inventory system, Kim Company's 2010 cost of goods sold will be
A) understated by $750
B) understated by $1, 900
C) overstated by $750
D) overstated by $1, 900
Periodic Inventory System
An inventory accounting system where updates to inventory levels are made periodically, usually at the end of a financial reporting period, as opposed to continuously.
Cost of Goods Sold
The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead expenses.
Beginning Inventory
The worth of merchandise on hand ready to be sold at the beginning of a financial period.
- Assess how errors in valuing inventory influence financial statements.
Verified Answer
Jul 09, 2024
Learning Objectives
- Assess how errors in valuing inventory influence financial statements.
Related questions
The Accountant for the Hilda Company Recorded a Purchase of ...
An Overstatement of Reported Net Income for the Current Year ...
Laura Company Received Merchandise on December 31, 2010 ...
The Correct 2010 Net Income for Margie Company, After Error ...
Understating Ending Inventory Understates Both Current and Total Assets