Intermediate Accointing I

Question 1

Understated Ending Inventory Effects on Balance Sheet:

Answer 1

Retained Earnings Understated
Working Capital Understated
Current Ratio Understated

Question 2

Understated Ending Inventory Effects on Income Statement:

Answer 2

Cost of Goods Sold Overstated
Net Income Understated

Question 3

Purchases and Inventory Not Recorded - Effects on Balance Sheet:

Answer 3

Inventory Understated
Accounts Payable Understated
Current Ratio Overstated

Question 4

Purchases and Inventory Not Recorded - Effects on Income Statement:

Answer 4

Purchases are Understated
Ending Inventory Understated

Question 5

Overstating inventory -

Answer 5

understates cost of goods sold,
overstates net income,
overstates retained earnings.

Question 6

Understating inventory -

Answer 6

Overstates cost of goods sold,
understates net income,
understates current assets,
understates retained earnings.

Question 7

Understating inventory -

Answer 7

Overstates cost of goods sold,
understates net income,
understates current assets,
understates retained earnings.

Question 8

Failing to record purchases

Answer 8

understated liabilities and
overstated owners equity.

Question 9

Understating Inventory causes errors on the Balance Sheet:

Answer 9

Understates retained earnings
Understates working capital
Understates current ratio

Question 10

Understating Inventory causes errors on the Income Statement:

Answer 10

Overstates Costs of Goods Sold
Understates Net Income