Question: Zealand Ltd Zealand is a distributor of imported products In

Zealand Ltd. (Zealand) is a distributor of imported products. In the fiscal year just ended, a number of errors were made in accounting for inventory. For each of the following errors, indicate their effect on the financial statement elements and ratios shown in the following table. Indicate whether the financial statement element or ratio would be overstated, understated, or not affected by the error. Zealand uses a periodic inventory control system. The ratios before considering the adjustments are shown in brackets in the table.
a. Some inventory was accounted for as sold even though it wasn't shipped as of the end of the year. The inventory wasn't included in the inventory count. Revenue is normally recognized on delivery.
b. Some inventory wasn't counted.
c. The NRV of previously-written-down inventory recovered but wasn't written back up.
d. Inventory received from a supplier on consignment was included in the inventorycount.

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  • CreatedFebruary 26, 2015
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