After preparing its draft final accounts for the year ended 31 August 22Y0 and its draft balance sheet as at 31 August 22Y0, DEF Enterprises discovered an error in the stock lists used to compute stock value as at 31 August 22Y0 The entry was Stock item Number Cost per unit Total cost S123 100 5 40 540 Required (a) Describe the error in this entry (b) Evaluate the impact of this error on (i) the stock value as at 31 August 22Y0 (ii) the cost of goods sold for the year ended 31 August 22Y0 (iii) the net profit for the year ended 31 August 22Y0

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Question: After preparing its draft final accounts for the year ended 31 August 22Y0 and its draft balance sheet as at 31 August 22Y0, DEF Enterprises

After preparing its draft final accounts for the year ended 31 August 22Y0 and its draft balance sheet as at 31 August 22Y0, DEF Enterprises discovered an error in the stock lists used to compute stock value as at 31 August 22Y0. The entry was:

Stock item	Number	Cost per unit	Total cost
S123	100	£5.40	£540

Required: (a) Describe the error in this entry. (b) Evaluate the impact of this error on: (i) the stock value as at 31 August 22Y0. (ii) the cost of goods sold for the year ended 31 August 22Y0. (iii) the net profit for the year ended 31 August 22Y0.

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