Reference no: EM132950031

Problem 1: The accounting staff of a merchandise company erroneously overstated the beginning balanca of the inventory account. Under IAS 8, the effect of this erroe is to

a. Overstate net purchase

b. Overstate gross margin

c. Understate cost of good sold

d. Overstate cost of goods available for sale

Problem 2: The following are the example of accounting errors except

a. Recognition of gain on fully depreciated asset

b. Incorrect classification of an expenditure as between expense and asset

c. Failure to recognize accrual and deferral

d. Misstatement of asset, liabilities and equity

Problem 3:  If the accounting staff erroneously omitted to recognize depreciation expense at the end of an accounting period, this will result in

a. Overstated expenses

b. Understated income

c. Understated assets

d. Overstated assets