Assume That the 2020 Errors Are Not Discovered in 2021

question 135

Multiple Choice

Assume that the 2020 errors are not discovered in 2021. However, ending inventory at the end of year 2021 is recorded at correct amount. By how much will 2021 net income be over or understated?

• A) $6,000 overstated
• B) $4,000 understated
• C) $4,000 overstated
• D) $6,000 understated
• E) There is no effect on net income.

Learn how to calculate and analyze the cost of goods manufactured, cost of goods sold, and inventory valuation using job order cost accounting.

Demonstrate the ability to prepare and analyze job cost sheets for tracking direct materials, direct labor, and applied overhead costs.

Understand the process of applying factory overhead to jobs using predetermined rates based on direct labor, direct material, or other bases.

Develop skills in the preparation of journal entries related to the job order cost accounting cycle, including transactions for materials, labor, overhead, and the sale of completed jobs.

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