Question
All else being equal, which of the following statements with respect to the impact of inventory...
All else being equal, which of the following statements with respect to the impact of inventory errors is NOT correct?
A) An overstatement of ending inventory will result in an understatement of income.
B) An overstatement of ending inventory will result in an overstatement of income.
C) An overstatement of beginning inventory will result in an understatement of income.
D) An understatement of beginning inventory will cause cost of goods sold to be understated.
Homework Answers
Answer #1
Goods held by consignee are still owned by Jersey Co and hence will be included in the final inventory of the company.
The inventory is recorded at cost price + additional expenses related to goods.
The $5,000 transport to consignee is part of the 'cost' of getting the inventory to the place it will be sold.
Frieght inward are always included in cost of sales.
Is there an option 4 which has 563000 as an answer?
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