1 Explain the Effect of the Following on the Financial

question 69

Essay

1. Explain the effect of the following on the financial statements:
Goods held on consignment were included in the ending inventory count.
Goods purchased FOB shipping point were in transit on the last day of the year. The goods were not counted as part of ending inventory.
Goods sold FOB shipping point were in transit on the last day of the year. These goods were not counted as part of ending inventory.
2. What happens if inventory errors are not found and corrected?

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Definitions:

Cost of Goods

The total expense incurred in the production of goods sold by a company, including raw materials and labor costs.

Income Statement

A financial statement that details a company's revenues and expenses over a specific period, showing the net profit or loss.

Administrative Expenses

Expenses related to the general operation of a business, like salaries of executive personnel, accounting department costs, and legal fees.

Eco-efficiency Measure

A metric to assess the economic and environmental performance of a process or product, aiming to achieve higher productivity while reducing environmental impacts.