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OVERSTATED & UNDERSTATED

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › OVERSTATED & UNDERSTATED

  • This topic has 3 replies, 2 voices, and was last updated 4 weeks ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • July 9, 2022 at 4:48 am #660194
    ThaeJulyOo257
    • Topics: 10
    • Replies: 6
    • ☆

    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!

    July 9, 2022 at 10:15 am #660207
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49914
    • ☆☆☆☆☆

    Please do not simply type out test questions and expect to be provided with an answer.

    Tell me what you think the correct answer is and I will tell you whether or not you are correct!

    Have you watched our free lectures?

    July 11, 2022 at 9:00 am #660273
    ThaeJulyOo257
    • Topics: 10
    • Replies: 6
    • ☆

    Asset – Understated
    Profit – Overstated

    July 11, 2022 at 9:23 am #660276
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49914
    • ☆☆☆☆☆

    Assets are over-stated (because they included inventory that has already been sent out to customers).

    Profit is over-stated also.

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