Assuming That Ending Inventory for 2012 Was Understated,indicate Whether Each

question 44

Essay

Assuming that ending inventory for 2012 was understated,indicate whether each of the following will be understated (U),overstated (O),or not affected (N).
_____ 1.Beginning inventory for 2013
_____ 2.Cost of goods sold for 2012
_____ 3.Stockholders' equity at the end of 2013
_____ 4.Income before income taxes for 2013
_____ 5.Stockholders' equity at the end of 2012
_____ 6.Cost of goods sold for 2013
_____ 7.Income before income taxes for 2012

---

Definitions:

Inventory Costing Method

An approach used to value inventory and determine the cost of goods sold, including methods like FIFO, LIFO, and weighted average.

Cost Flow Assumption

A method used in accounting to determine the value of inventory sold and remaining in stock, common methods include FIFO, LIFO, and weighted average.

Physical Movement

The actual movement or transportation of goods in a supply chain.

Average Cost Flow

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.