Which of the following errors will normally result in overstatement of 2015 net income?
A) failure to record merchandise purchases in 2014
B) understatement of 2014 ending merchandise inventory
C) failure to record accrued salaries expense in 2014
D) overstatement of prepaid expense in 2014

Question

Quizplus · Accepted Answer

Understatement of 2014 ending merchandise inventory will result in a lower cost of goods sold in 2015, which will increase the gross profit and net income for the year. The other options would result in decreased net income for 2015.

Which of the Following Errors Will Normally Result in Overstatement