Question Details

Widner Company understated its inventory 



1.	Paulson, Inc. has 5 computers which have been part of the inventory for over two years. Each computer cost ₤600 and originally retailed for ₤825. At the statement date, each computer has a net realizable value of ₤350. What value should Paulson, Inc., have for the computers at the end of the year?
a.	₤1,250.
b.	₤1,750.
c.	₤3,000.
d.	$4,125.


	
2.	Paulson, Inc. has 5 computers which have been part of the inventory for over two years. Each computer cost ₤600 and originally retailed for ₤825. At the statement date, each computer has a net realizable value of ₤350. How much loss should Paulson, Inc., record for the year?
a.	₤1,125.
b.	₤1,250.
c.	₤1,500.
d.	₤1,750.


	3.	Widner Company understated its inventory by $10,000 at December 31, 2010. It did not correct the error in 2010 or 2011. As a result, Widner's equity was:
a.	understated at December 31, 2010, and overstated at December 31, 2011.
b.	understated at December 31, 2010, and properly stated at December 31, 2011.
c.	overstated at December 31, 2010, and overstated at December 31, 2011.
d.	understated at December 31, 2010, and understated at December 31, 2011.


	4.	Understating beginning inventory will understate
a.	assets.
b.	cost of goods sold.
c.	net income.
d.	equity.


	5.	An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is
	Cost of Goods Sold	Net Income
a.		Understated	Understated
b.		Overstated	Overstated
c.		Understated	Overstated
d.		Overstated	Understated





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