Determine the Effect on Net Income of Each of the Following

question 107

Essay

Determine the effect on net income of each of the following errors.Treat each part of this question as an independent case and assume that the error given is the only error during the year.
a.Ending inventory is overstated by $5,000.
b.Beginning inventory is overstated by $7,000.
c.Ending inventory is understated by $4,000.
d.Beginning inventory is understated by $6,000.
e.Ending inventory is overstated by $2,500.
f.Beginning inventory is overstated by $9,500.
g.Ending inventory is understated by $6,200.

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Definitions:

Predictive Validity

The extent to which a score on a scale or test predicts scores on some criterion measure.

Convergent Validity

A measure of validity based on the degree to which a test correlates with other tests that it is theoretically supposed to correlate with.

Emotional Quotient

A measure of a person's ability to recognize, understand, and manage their own emotions and the emotions of others.

Reactivity

The phenomenon wherein individuals modify their behavior in response to the awareness that they are being observed.