In its physical inventory count at its March 31, 2011, year end, Backspring Corporation excluded inventory that
Question:
In its physical inventory count at its March 31, 2011, year end, Backspring Corporation excluded inventory that was being held on consignment for Backspring by another company. The merchandise was sold in the next year and the inventory was correctly stated at March 31, 2012.
Instructions
Ignoring income tax, indicate the effect of this error (overstated, understated, or no effect) on the following:
(a) Cash at the end of 2011 and 2012
(b) The cost of goods sold for each of 2011 and 2012
(c) Profitforeachof2011and2012
(d) Retained earnings at the end of 2011 and 2012
(e) Ending inventory at the end of 2011 and 2012
(f) The gross profit margin for each of 2011 and 2012
(g) The days in inventory ratio for each of 2011 and 2012
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a Cash b Cost of Goods Sold c Profit d Retained Earnings ...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
