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What is the effect of the accounting errors on net income

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Question - Inventory error. The company counted inventory incorrectly as of 12/31/08. As a result, ending inventory for the year ended 12/31/08 was overstated by $4,000.

Accrued wages errors. Clarence forgot to accrue $3,400 of wages payable as of 12/31/07. All of these wages were paid and expensed early in fiscal 2008.

Accounting errors in this problem include inventory and accrued wages. Ignore tax effects in your answers.

a. What is the effect of the accounting errors on net income for fiscal 2008 (year ended 12/31/08)? Provide a dollar amount and indicate overstate, understate, or no effect.

b. What is the effect of the accounting errors on total assets as of 12/31/08? Provide a dollar amount and indicate overstate, understate, or no effect.

Reference no: EM131915329

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