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Viktor [21]
3 years ago
12

2014 ending inventory was overstated by $25,000, but it was too late to correct the financial statements. Which of the following

describes the effect of the inventory error on the 2014 financial statements?A. Net income and stockholders' equity are both understated.
B. Net income is understated and stockholders' equity is correct.
C. Net income and stockholders' equity are both overstated.
D. Net income and stockholders' equity are both unaffected.
Business
1 answer:
expeople1 [14]3 years ago
4 0

Answer:

C. Net income and stockholders' equity are both overstated.

Explanation:

In the income statement , ending inventory is deducted from the addition of the beginning inventory and net purchases to arrive at the cost of goods sold. Therefore, the cost of goods can be stated as an equation stated as follows:

Cost of goods sold = Beginning inventory + Net purchases - Ending inventory

From the above equation, it can be observed that if the ending inventory is overstated, cost of goods sold will be understated by that amount.

Since gross income is determined by deducting cost of goods sold from the net sales, an understated cost of goods sold will result in an overstated gross income and subsequently overstated net income.

Since net income is one of the components of the stockholders' equity, an overstated net income will leads to an overstated stockholders' equity.

Therefore, the correct option is C. Net income and stockholders' equity are both overstated.

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Margaret [11]

Answer:

The explicit cost of flight includes cost of fuel, maintenance cost, payment to pilot.

Explanation:

The explicit costs are the direct costs incurred during the process of production or business. Here, the payments made to the pilot will be a variable cost, the cost of fuel, etc will be explicit cost.  

The marginal explicit cost is the increase in the explicit cost with an additional output. The incremental cost of flight correctly determines the marginal explicit cost.  

Opportunity cost is the cost of sacrificing the alternative. Here, the marginal opportunity cost will be the revenue that the firm would have earned by renting the flight to other firms or individuals.

3 0
3 years ago
You work for an accounting firm. Just last week the state legislature passed reforms to the state tax code. The revised tax code
kolezko [41]

A summary is simply known as a short explanation of a work's content. The type of short informational report that I have been asked to write is a summary.

A summary report can consist of;  

  • The author's major supporting ideas.
  • They show the author's purpose in writing etc.

A summary often start with an introductory sentence that talks about the text's title, author and main point of the text as you see it.

A summary is often written in your own words and it should have the ideas of the original text.

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brainly.com/question/17180048

3 0
2 years ago
d. Suppose that the increase in input price does not occur but, instead, that productivity increases by 25% percent. What would
worty [1.4K]

Answer:

decreased by 20%

Explanation:

Supposed we have input price of $30,000 and it produced an output of 300 units on the first year of operation. The cost per unit on the first year is $100 each ($30,000/300).

On the second year we still have the same input expense of $30,000 but the productivity output increased by 25%. So we have 375 units produced on the second year’s operation. The new cost per unit would be $30,000/375=$80 per unit.

Therefore we conclude that based on the example given, the new unit cost per product decreases by 20%.

$100-80 = $20

$20/$100 = 20%

4 0
3 years ago
If the federal open market committee decides to increase the money supply, then
OLEGan [10]

Answer:

the Federal Reserve creates dollars and uses them to purchase government bonds from the public.

Explanation:

The money supply is increased by the Federal Reserve Open Market Committee under expansionary monetary policy actions to increase the level of aggregate demand in the market and push the level of output when business activity in the economy is low and the economy is experiencing a recession.

The FOMC creates dollars and uses them to purchase government bonds from the public that injects money in the market by increasing the credit creation capacity of commercial banks. As the money supply increases, the spending capacity of consumers is increased, either by lowering the cost of debt on their credit cards or by increasing employment in the market with increased investments by firms as they borrow with greater zeal when the cost of borrowing is low.  

8 0
3 years ago
Support functions manage and improve the efficiency of an organization's conversion processes so that more value is created.
HACTEHA [7]

Answer:

a) true

Explanation:

Support Function include Information Technology, Human Resources, Finance and Marketing. These are there to ensure that conversion process is efficient by providing support services such as sourcing of talent, fund management, communication.

3 0
3 years ago
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