When performing his year-end inventory count Mahmood accidentally counted goods that were in the despatch area waiting to be delivered to customers. The goods had a cost of $50000 and were despatched prior to the year-end.
What impact does this uncorrected error have on profit and assets at y/e?
Assets - Overstated or Understated
Profits - Overstated or Understated
Answer my question pls. sir!
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OVERSTATED & UNDERSTATED
4y ago#1Please do not simply type out test questions and expect to be provided with an answer.
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Asset - Understated
Profit - Overstated
4y ago#3Assets are over-stated (because they included inventory that has already been sent out to customers).
Profit is over-stated also.
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