The Bookkeeper for Duncan Company Made an Error in Recording

question 67

Essay

The bookkeeper for Duncan Company made an error in recording the year-end inventory balance on December 31, 2018. As a result, ending inventory was understated by $37,000.
a)What effect will this error have on cost of goods sold, gross margin, net income, and owner's equity in 2018?
b)As of December 31, 2019, what will be the cumulative effect of this error on owner's equity?

Understand the concepts of cross hedging and surrogate hedging.

Explain the role and operation of foreign exchange futures and forwards markets.

Recognize the relationship between commodity spot prices, futures prices, and the cost of carry.

Understand the risk management techniques using futures contracts.

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Definitions:

Financial Accounting

Financial Accounting is the field focused on the collection, analysis, and reporting of financial transactions pertaining to a business, resulting in the production of financial statements.

Managerial Accounting

The practice of identifying, measuring, analyzing, and interpreting financial information for the pursuit of an organization's goals.

Distinguishing Characteristics

These are unique features or properties that set an entity, such as a product, brand, or organization, apart from others in its category.

Direct Materials Used

The quantity and cost of raw materials consumed in the production of finished goods.