In the Following Questions, Inventory Errors Are Noted for 2016

question 78

Essay

In the following questions, inventory errors are noted for 2016. Assume that the errors are not discovered until 2017, and that the company uses a periodic inventory system. Indicate the effect of the error, if any, on the accounts noted in the columns, using the following code:
U = Understated; O = Overstated; NE = No effect

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Definitions:

Undisclosed Principal

A party for whom an agent acts without revealing that party's identity to the third party with whom the agent deals.

Elect

To choose or select someone or something through a voting process or decision-making mechanism.

Identity

The distinguishing character or personality of an individual; or the way a person or thing is recognized or known.

Fraudulent Misrepresentation

A false statement of fact made by a person who knows, or should know, that it is false, and made with the intention of deceiving another.