For Each of the Following,indicate the Effect the Given Situation

question 91

Essay

For each of the following,indicate the effect the given situation would have on net income in the current period.
O overstate net income
U understate net income
N/A not applicable; no effect on net income
_____ recording prepaid costs as current expenses.
_____ recording an expense at more than the actual cost.
_____ failing to record the receipt of a payment by a customer on account.
_____ underestimating amortization expense.
_____ failing to record some supplies received.
_____ recording unearned revenue as revenue.
_____ recording an expense as revenue.
_____ failing to record the company issuing additional shares of its own common stock.
_____ overestimating payroll tax expense.

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the market price they actually receive, representing their net benefit.

Free Trade

International trade left to operate without tariffs, quotas, or other restrictions, allowing for the unrestricted exchange of goods and services between countries.

Autarky

A condition in which an economy is self-sufficient and does not engage in international trade.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society.