Overestimate the profitability of the business, Accounting Basics

Assignment Help:

In Exhibit the accurately stated ending inventory for the year 2009 is USD 35000. As a result Allen has a gross margin of USD 135000 as well as net income of USD 50000. The statement of retained earnings demonstrates beginning retained earnings of USD 120000 and an ending retained earnings of USD 170000. When the ending inventory is overstated by USD 5000 as published on the right in Exhibit 44 the gross margin is USD 140000 and net income is USD 55000. The statement of retained earnings after that has ending retained earnings of USD 175000. The ending inventory overstatement of USD 5000 origins a USD 5000 overstatement of net income and a USD 5000 overstatement of retained earnings. The balance sheet would illustrate both an overstated inventory and overstated retained earnings. Because of the error in ending inventory both the stockholders and creditors may overestimate the profitability of the business.

2053_Overestimate the profitability of the business.png


Related Discussions:- Overestimate the profitability of the business

The process of adjusting the bond interest expense account, The process of ...

The process of adjusting the bond interest expense account for any premium or discount is called amortization of the premium or discount

State the steps of merchandise inventory, State the steps of Merchandise in...

State the steps of Merchandise inventory 1) TRANSFER THE BEGINNING INVENTORY FIGURE Debit INCOME SUMMARY for beginning inventory amount. Credit MERCHANDISE INVENTORY fo

Explain about percentage of completion method, Q. Explain about Percentage ...

Q. Explain about Percentage of completion method? The percentage-of-completion method makes out revenue based on the estimated stage of completion of a long-term project. To ca

What is posting reference column, Q. What is Posting reference column? ...

Q. What is Posting reference column? This column demonstrates the account number of the debited or credited account. For example in Exhibit 8 the number 100 in the first entry

Proprietorship , After adjustments and the closing of revenue and expense a...

After adjustments and the closing of revenue and expense accounts at February 28, 2015, the end of the first full year of operations, the income summary account has a credit balanc

Prepare journal entries to record transactions, On January 1, 2012, Magnus ...

On January 1, 2012, Magnus Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar. 1

Encryption, At the reception it is decrypted and actual data is obtained. ...

At the reception it is decrypted and actual data is obtained. Explain the different methods of encryption technique

safety stock is appropriate, Given this information: Lead-time demand =...

Given this information: Lead-time demand = 600 pounds Standard deviation of lead-time demand = 52 pounds (Assume normality.) Acceptable stockout risk during lead time = 4

Example of physical inventory, Q. Example of physical inventory? Taking...

Q. Example of physical inventory? Taking a physical inventory may perhaps disrupt the normal operations of a business. Therefore the count should be administered as quickly and

Objectives of financial statement analysis, OBJECTIVES OF FINANCIAL STATEME...

OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS Financial Statements are analyzed by dissimilar users for dissimilar purposes. Some of the purposes are as under- 1. To recognize

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd