Firefox File Edit View History Bookmarks Tools Window Help 63% E, a , Sat 11:40

Question

Firefox File Edit View History Bookmarks Tools Window Help 63% E, a , Sat 11:40 AM E Module 10 Exam C Chegg Study | Guided Solution X+ ezto.mheducation.com/hm.tpx ? search E connect Soumaila KAFANDO Foundations in Accounting: Summer 7000 2018 ACCOUNTING Module 10 Exam instructions I help Question 3 (of 15) Save & Exit Submit Time remaining: 0:27:21 3. A company using the periodic inventory system correctly recorded a purchase of merchandise, but the merchandise was not included in the physical inventory count at the end of the accounting period. The error caused which of the following? An overstatement of inventory, purchases, and accounts payable. O An overstatement of net income and inventory O An understatement of inventory. purchases, and accounts payable. O An understatement of both net income and inventory

Explanation / Answer

The Company is using Periodic Inventory system to value its inventory. Due to the nature of system under Periodic System: Company has recorded the purchase of inventory correctly.Hence Purchases and Accounts Payable are correct. But while physical count, inventory has been missed leading to lesser closing inventory value and in turn reducing the net income Hence the answer is understatement of Both Net Income and Inventory

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.