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

Company accounts- issue of debentures, Company took loans of rs 400000from ...

Company took loans of rs 400000from mbl and issued 8% debentures of rs 500000b as collateral security pass journal entries regarding issue of debentures if any and show the loan in

How is a po (purchase order created), A document or shape used by a custome...

A document or shape used by a customer to issue an order for goods or services. I need notes on 1.Procure to pay cycle with accounting entries 2.give to cash

Contract Account, contractee account is it an assets account or expenses Ac...

contractee account is it an assets account or expenses Account

Explain about trial balance, Q. Explain about Trial balance? Trial bala...

Q. Explain about Trial balance? Trial balance -- at the close of an accounting period, transactions posted in the ledger areadded up. A trial or test balance sheet is prepared

Gender for the moment, The CPSdata to re-estimate the difference among aver...

The CPSdata to re-estimate the difference among average male and female pay. Use for example, the regression LS LNWAGE C FE a.  Can you avoid the hypothesis that mean female

Net present value, Having trouble with word problem: Planned Acquisition ...

Having trouble with word problem: Planned Acquisition cost $2.1M Salvage Value $0 16% discount rate savings = year end Savings: year 1 150k year 2 175k year 3 300K year

State about the posting closing entries, Posting closing entries When c...

Posting closing entries When closing entries are entered in the General Journal, they must appear on the next line after Adjusting Entries. The words "Closing Entries" must be

Effect of transction, example of increase asset, decrease owner equity

example of increase asset, decrease owner equity

The qualitative characteristics of relevance and reliability, Maryanne was ...

Maryanne was looking to purchase a local business that sold coal jewelry to tourists along the interstate. The present business owner instructed his accountant, Jane Sane, CPA, to

What is long-term liabilities, Q. What is Long-term liabilities? Long-t...

Q. What is Long-term liabilities? Long-term liabilities are debts such as a bonds payable and mortgage payable that aren't due for more than one year. Companies must show matur

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