In the Following Questions, Inventory Errors Are Noted for 2009

question 87

Essay

In the following questions, inventory errors are noted for 2009. Assume that the errors are not discovered until 2010, 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

- $$\begin{array} { | l | l | l | } \hline { \text { Error } } & \text { Cost of goods sold } & \text { Retained earnings } \\\hline \begin{array} { l } \text { Recorded purchases for } \$ 523,000 \text { that } \\\text { should have been } \$ 532,000 .\end{array} & & \\\hline\end{array}$$

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Definitions:

Traditional Recruitment

Traditional recruitment refers to the conventional methods of sourcing candidates, such as job advertisements, campus recruitment, and employment agencies, focused on filling vacancies in an organization.

'Sell' Itself

When a product, service, or idea is so appealing or well-marketed that it requires minimal effort to persuade consumers to purchase or adopt it.

Tangible Capital

Physical assets owned by a firm or individual that are used in the production of goods and services, such as machinery, buildings, and vehicles.

Capital

The collection of physical and financial assets used by an individual or organization to produce goods and services.