Question

Indicate the effects of the following errors on each of the items listed in the column headings below. Use the following symbols: O = overstated, U = understated and NE = no effect. Assume that the company does not use the direct write-off method to account for uncollectible accounts.


• Gross Profit = Sales - Cost of Goods Sold
• Current Ratio = Current Assets ÷ Current Liabilities
• Receivables Turnover Rate = Sales ÷ Average Accounts Receivable (net)
• Working Capital = Current Assets - CurrentLiabilities


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  • CreatedApril 17, 2014
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