The Accountant for Sue Company Made the Following Errors Related $2010 \mathrm{was}$

question 50

Multiple Choice

The accountant for Sue Company made the following errors related to inventory in 2010: 1. The beginning inventory for $2010 \mathrm{was}$ overstated by $\$ 375$ due to an error in the physical count.
2. A $\$ 650$ purchase of merchandise on credit in 2010 was not recorded or included in the ending inventony.
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2010 by these errors?
$\begin{array}{lll}&\text { Cost of Goods Sold }&\text { Gross Profit }&\text { Net Income }\\\hlineI.&\text { Overstated } & \text { Understated } & \text { Understated } \\II.&\text { Overstated } & \text { Understated } & \text { No effect } \\III.&\text { Understated } & \text { Overstated } & \text { Overstated } \\IV.&\text { No effect } & \text { No effect } & \text { No effect }\end{array}$

• A)I
• B)II
• C)III
• D)IV

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