A form uses the periodic inventory system. Last year an internal error resulted in ending inventory being understated by $20,000. This year someone forgot to record a purchase of $30,000. If these errors are not discovered and corrected until sometime in the future, what is the impact of these events on this year's net income and retained earnings? Are they over or under-stated? By how much?
There is an overstatement in the net income when Ending inventory is understated by $20,000, hence the net income will be... View the full answer
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Answer: Surely this errors are going the effect the income statement and retained earning. As the ending the inventory is... View the full answer
Effect of errors on income statement and retained earnings: When errors have been made in recording... View the full answer