Chapter Six Quiz
26. If ending inventory for the current period is understated, then owner’s equity will be_______.
27. Using the lower-of-cost-or-market rule of valuing inventory allows the accountant to attain_______.
28. Two separate errors affected Computer Sales in 20X7. The beginning inventory was overstated by $12,000 and the ending inventory was overstated by $18,000. Net income in 20X7 will be_______.a.overstated by $30,000b.overstated by $12,000c.understated by $6,000d.overstated by $6,000
29. Ending inventory for Commodity X consists of 20 units. Under the FIFO method, the cost of the 20 units is $5 each. Current replacement cost is $4.50 per unit. Using the lower-of-cost-or-market rule to value inventory, the balance sheet would show ending inventory of _______.
30. Inventory at the end of the current year is overstated by $20,000. What effect will this error have on the following year's net income?
31. Table 2