Practice | Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet

Principles of Accounting Volume 1: Financial Accounting

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Q1 | Which of the following financial statements would be impacted by a current-year ending inventory error, when using a periodic inventory updating system?

balance sheet

income statement

neither balance sheet and income statement

balance sheet, income statement

Q2 | Which of the following would cause periodic ending inventory to be overstated?

Goods held on consignment are omitted from the physical count.

Goods purchased and delivered, but not yet paid for, are included in the physical count.

Purchased goods shipped FOB destination and not yet delivered are included in the physical count.

None of the above

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