Effects of errors on financial statements
Show how the following independent errors will affect net income on the income statement and the shareholders' equity section of the statement of financial position (SFP) using the symbol + (plus) for overstated, - (minus) for understated, and 0 (zero) for no effect.
1. Ending 2019 inventory overstated
2. Failure to accrue 2019 interest revenue
3. A capital expenditure for factory equipment (useful life, 5 years) was charged to expense in error in 2019
4. Failure to accrue 2019 wages
5. Ending inventory in 2019 understated
6. Overstated 2019 depreciation expense; 2020 expense correct

Question

Effects of errors on financial statements
Show how the following independent errors will affect net income on the income statement and the shareholders' equity section of the statement of financial position (SFP) using the symbol + (plus) for overstated, - (minus) for understated, and 0 (zero) for no effect.  
1. Ending 2019 inventory overstated
2. Failure to accrue 2019 interest revenue
3. A capital expenditure for factory equipment (useful life, 5 years) was charged to expense in error in 2019
4. Failure to accrue 2019 wages
5. Ending inventory in 2019 understated
6. Overstated 2019 depreciation expense; 2020 expense correct

Quizplus · Accepted Answer

The Answer of Effects of errors on financial statements
Show how the following independent errors will affect net income on the income statement and the shareholders' equity section of the statement of financial position (SFP) using the symbol + (plus) for overstated, - (minus) for understated, and 0 (zero) for no effect.  
1. Ending 2019 inventory overstated
2. Failure to accrue 2019 interest revenue
3. A capital expenditure for factory equipment (useful life, 5 years) was charged to expense in error in 2019
4. Failure to accrue 2019 wages
5. Ending inventory in 2019 understated
6. Overstated 2019 depreciation expense; 2020 expense correct

Effects of Errors on Financial Statements