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Anon25 [30]
3 years ago
6

Aaron Company uses the periodic inventory cost flow method. If Aaron's ending inventory is understated due to an accounting erro

r, what is the effect on net income and the ending balance of retained earnings?a. net income= understated, retained earnings= understated
b. net income= understated, retained earnings overstated
c. net income= overstated, retained earnings= understand
d. net income= overstated, retained earnings= overstated
A) option a
B) option b
C) option c
D) option d
Business
1 answer:
cestrela7 [59]3 years ago
4 0

Answer:

a. net income= understated, retained earnings= understated

Explanation:

In accounting and auditing it is established that ending inventory and net income moves in the same direction when it comes to being overstated or understated. That implies that if <u>ending inventory is understated</u>,  then cost of goods sold will be overstated by the same amount, and when costs are overstated it finally leads to <u>net income and gross profit being understated.</u>

Furthermore, since it is the net income that will be added to retained earnings thereafter, it implies that the lesser the net income the lesser will be retained earnings. Hence, understatement of ending inventory is understatement of net income and also retained earnings.

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Which of the following is considered to be an accrued expense?
scoundrel [369]

Answer:

B. a computer technician has installed the latest software updates, but you have not received an invoice or made payment

Explanation:

An accrued expense arises when a service has been rendered to an individual or organisation but to which the recipient of the service has not made payment for the service. The expense will be recognized in the period in which the service is rendered. In this scenario, the technician has rendered a service by installing software updates but the organisation has not made payment for the service provided. This represents an accrued expense.

8 0
4 years ago
Cattle House Steaks, a Colorado company, enters into a contract over the phone with Beef Packing Inc., an out-of-state corporati
DanielleElmas [232]

Answer: d. under the minimum-contacts test.

Explanation:

Cattle House Steaks, a Colorado company, enters into a contract over the phone with Beef Packing Inc., an out-of-state corporation. If a dispute arises, a Colorado court can exercise jurisdiction over Beef Packing under the minimum-contacts test.

Minimum contacts applies to situations whereby a court in one state can assert its personal jurisdiction over another defendant which isn't in that same state but is in another state.

5 0
3 years ago
The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups tradit
Yuki888 [10]

Answer:

true

Explanation:

  • The given statement is true here because the purpose of Work Opportunity Credit is to encourage employers to hire people who are facing employment barriers and are resulting in high unemployment.
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5 0
3 years ago
Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, an
fgiga [73]

Answer:

Explanation: Journal Entries

Debit: Cash. $19.7m

Credit: Unearned Revenue $19.7m

Being sales of gift card for the month of December.

Debit: Unearned Revenue. $12.7m

Credit: Sales. $12.7m

Being actual gift card redeemed for the month if December.

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4 0
3 years ago
Read 2 more answers
Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A
notsponge [240]

Answer:

$100 in bank A

$900 in bank B

Explanation:

Since the required reserve ratio is 10%, then bank A can lend up to 90% of the funds to bank B, and must keep the remaining 10%.

  • bank A = $1,000 x 10% = $100
  • bank B = $1,000 x 90% = $900

If bank B borrowed the money to another client, then they would be able to borrow $900 x 90% = $810, and they should keep $90 as reserves.

5 0
3 years ago
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