1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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.

You might be interested in
The death benefit of a(n) _____ life insurance policy may go down because of poor investment returns.
ICE Princess25 [194]
<span>The death benefit of a(n) variable and universal life insurance policy may go down because of poor investment returns.
Universal life insurance and variable life insurance are two types of permanent life insurance, in this case if the the person who insured dies any time</span><span> as long as there is enough cash value to pay the costs of insurance in the policy, the death benefit will be paid. </span>
6 0
3 years ago
You are considering purchasing a new automobile that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 mont
bija089 [108]

Answer:

so correct option is B) $527

Explanation:

given data

cost = $28,000

offer APR = 4.9 % = \frac{4.9}{12} = 0.0041

time = 60 months

finance the entire = $28,000

solution

we will apply here formula for calculate monthly payment  that is

= \frac{r(1+r)^t}{(1+r)^t -1}    ...........1

here r is rate that is 0.0041 and t is time that is 60 put here value we get

=  \frac{0.0041(1+0.0041)^{60}}{(1+0.0041)^{60} -1}

= 0.01883

so monthly payment is = 28000 × 0.01883

monthly payment is $527

so correct option is B) $527

6 0
3 years ago
Read 2 more answers
taxes: a. are unlikely to affect market supply and demand b. are copmulsory payments to governments c. never affect efficiency i
Crank

Answer:

The answer is B.

Explanation:

Taxes are compulsory payment levied by a government of a country. It is not voluntary.

We have direct and indirect tax.

Direct taxes are those taxes that are imposed on individual and company. A company is charged at a rate after its profit is known. An individual earning salary is charged before the salary is collected.

Indirect taxed are those levied on goods and services. These types of taxed are pass on to the consumers in form of price of goods.

Tax is mandatory for everyone. Its a revenue for government

5 0
3 years ago
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
murzikaleks [220]

Answer:

Fair Credit Reporting Act is the correct answer.

Explanation:

7 0
2 years ago
Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for Oc
Viktor [21]

Answer:

Labor Efficiency Variance=268 Unfavorable

Labor Rate Variance= $ 150 Favorable

Total Direct Labor Cost Variance= $ 118

Work In Process $ 6432 debit

Explanation:

Glacier Bicycle Company

Quantity of direct labor used 500 hrs.

Actual rate for direct labor $13.10 per hr.

Standard direct labor per bicycle 2 hrs.

Standard rate for direct labor $13.40 per hr

The labor efficiency variance= (Standard Hours allowed  * standard labor Rate )- (  Actual Hours  * standard labor Rate )

Labor Efficiency Variance= (SH* SR)- (AH*SR)

Labor Efficiency Variance= ( 2* 240 *13.4) - (500* 13.4)

Labor Efficiency Variance= ( 480*13.4) - (500* 13.4)

Labor Efficiency Variance= $ 6432- $ 6700= 268 Unfavorable

Labor Rate Variance= (actual hours * actual rate) - (actual hours* standard rate)

Labor Rate Variance= ( 500 *13.1) - (500*13.4)= 6550-6700= $ 150 Favorable

Total Direct Labor Cost Variance=  Labor Efficiency Variance + Labor Rate Variance

Total Direct Labor Cost Variance= 268 Unfavorable +$ 150 Favorable

Total Direct Labor Cost Variance= $ 118

Work In Process $ 6432 debit

Labor Efficiency Variance  268 Unfavorable debit

Labor Rate Variance$ 150 Favorable credit

Accrued Payroll $ 6550 credit

5 0
3 years ago
Other questions:
  • Suppose it is decided that rent control in New York City will be abolished and that market rents will now prevail. Assume that a
    7·1 answer
  • Excey Corp. has 8 percent coupon bonds making annual payments with a YTM of 7.2 percent. The current yield on these bonds is 7.5
    7·1 answer
  • ]To estimate the percentage of defects in a recent manufacturing​ batch, a quality control manager at Daimler minus Chrysler sel
    5·1 answer
  • There are a number of toothpastes marketed under the Crest brand, including Cavity Protection Crest, Pro-Health Sensitive Shield
    15·1 answer
  • In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method.
    14·1 answer
  • Which of the following is an example of comparative advantage​? A. Michael Jordan is an American basketball player. B. The Unite
    12·1 answer
  • the yellow company has a current ratio of 2.65 . The acid test ratio is 2.01 . The current liabilities of the are company $45,00
    12·1 answer
  • which individual would most likely have agreed with the views expressed by rockefeller on business combinations
    11·1 answer
  • Explain a situation where user would transpose data on a spreadsheet in Microsoft Excel. Give at least one example to illustrate
    10·1 answer
  • Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own;
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!