Determine the Effect on Cost of Goods Sold,total Assets,and Gross

question 85

Essay

Determine the effect on cost of goods sold,total assets,and gross margin for 2016 and 2017 if the following inventory errors are not corrected.Indicate your answer with (+)for overstated,(-)for understated,and (0)for no effect.
a.Beginning inventory for 2016 is understated
b.Beginning inventory for 2016 is overstated
c.Ending inventory for 2016 is understated
d.Ending inventory for 2016 is overstated
a.
b.
c.
d.
a.
b.
c.
d.

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Definitions:

Non-Interest-Bearing Note

A promissory note with no stated interest rate, implying that interest is either implied in the transaction price or nonexistent.

Interest Expense

The expenses a company faces for borrowing money, usually shown on the income statement.

Discount On Notes Payable

This refers to the difference between the face value of a note payable and the amount received by the issuer, representing extra cost to be amortized over the term of the note.

Non-Interest-Bearing Note

A promissory note that does not accrue interest over its lifetime, typically requiring the borrower to repay only the principal amount.