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sdas [7]
3 years ago
14

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $229,13

4 instead of the correct amount of $165,639. The effect on the balance sheet and income statement would be
Business
1 answer:
Naya [18.7K]3 years ago
6 0

Answer:

Assets will be overstated and Net Income understated

Explanation:

The effect on the balance sheet and income statement

<u>Balance Sheet :</u>

Inventory will be overstated

Inventory belongs to the Current Asset group

Meaning Assets will be overstated

<u>Income Statement :</u>

Inventory will be overstated

This reduces cost of sales with an amount greater

Meaning Profits will be overstated

Conclusion

The effect on the balance sheet and income statement would be : Assets will be overstated and Net Income understated.

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