The accountant at Investotech discovered the following errors after calculating the company's profit for 20X3:(a)
A、non-current asset costing $50,000 has been included in the purchases account(b) Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expensesWhat is the effect of these errors on gross profit and net profit?
A、Understatement of gross profit by $40,000 and understatement of net profit by $30,000
B、Understatement of both gross profit and net profit by $40,000
C、Understatement of gross profit by $60,000 and understatement of net profit by $50,000
D、Overstatement of both gross profit and net profit by $60,000
A、non-current asset costing $50,000 has been included in the purchases account(b) Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expensesWhat is the effect of these errors on gross profit and net profit?
A、Understatement of gross profit by $40,000 and understatement of net profit by $30,000
B、Understatement of both gross profit and net profit by $40,000
C、Understatement of gross profit by $60,000 and understatement of net profit by $50,000
D、Overstatement of both gross profit and net profit by $60,000
【参考答案及解析】
Both errors will affect cost of sales and therefore gross profit, making a net effect of $40,000. Net profit will be further reduced by $10,000 missing from stationery expense
Both errors will affect cost of sales and therefore gross profit, making a net effect of $40,000. Net profit will be further reduced by $10,000 missing from stationery expense