The Accountant for Angie Company Made the Following Errors Related

question 75

Multiple Choice

The accountant for Angie Company made the following errors related to purchases of merchandise and ending inventory in 2013:
1.A $2,200 purchase of merchandise on credit was not recorded or included in ending inventory.
2.A $3,180 purchase of merchandise on credit was recorded, but it was inadvertently omitted from the end-of-year physical inventory count.
Assuming a periodic inventory system, Angie's Company's 2013 net income will be

• A) understated by $3,180
• B) understated by $2,380
• C) overstated by $5,380
• D) overstated by $3,180

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Definitions:

Shares Of Stock

Units of ownership interest in a corporation or financial asset, giving shareholders a proportion of the corporation's assets and profits.

Profit Margin

A financial metric representing the percentage of revenue that remains as profit after all expenses are deducted.

Return On Assets

A measure of how effectively a company uses its assets to generate profit, calculated as net income divided by average total assets.

Total Assets

The sum of all current and non-current assets owned by a company, indicating the total resources available for use in operations.