Answer: Option C - Assets are Overstated; No effects on liabilities: Equity is Overstated
Explanation:
When Bad debts are recorded, they will reduce the Accounts Receivable account because less money will be expected from debtors. Accounts Receivable is an asset account so it will be Overstated if bad debts are not recorded.
Equity will also be overstated because bad debts is an expense that is sent to the Income statement. If this expense is not deducted, the net income will be larger than it should be and when added to Equity it will overstate it.
The company must have absolute advantage.
Having been in business for a while, Landfall Service is a provider of outdoor furniture. Greater than any other company in the country, it is renowned for its capacity to make furniture quickly. The truth is that no rival businesses exist in any other country. Many of the items offered by Landfall Service have been exported. Actually, sales outside of the United States account for 80% of company income. In order to support domestic businesses, the Italian government has slapped a tax on imported furniture. On the other hand, because the government wanted a piece of the action, the Brazilian government levied taxes on Landfall Service items.
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Answer:
Here are some changes to the textbook requirements that will simplify your work somewhat.
· The transaction requirements give you information on required tables. (page 339-340)
· Assume that ALL orders ship entirely, in other words there are no partial shipments. Either they ship the entire order or they wait until they have all the required units and then ship.
· Do not include the Customer PO information
Explanation:
