Question Details

The inventory reported on Lazzard Company- statement 


1.	If beginning inventory is understated by $10,000, 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

2.	A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000. The amounts reflected in the current end of the period statement of financial position are
	   Assets		     Equity	
a.	Overstated	Overstated
b.	Correct	Correct
c.	Understated	Understated
d.	Overstated	Correct

3.	Overstating ending inventory will overstate all of the following except
a.	assets.
b.	cost of goods sold.
c.	net income.
d.	equity.


4.	The inventory reported on Lazzard Company- statement of financial position is understated by £1,250,000. The company- reported net income for the period will be 
a.	understated by £1,250,000.
b.	overstated by £1,250,000.
c.	correct.
d.	need more information to determine.


5.	If the inventory reported on a Gottleib Company- statement of financial position at December 31, 2010 is overstated by €1,200,000, the company- retained earnings balance at December 31, 2011 will be
a.	understated by €1,200,000.
b.	correct.
c.	overstated by €1,200,000.
d.	need more information to determine.





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