Harris company has items that were incorrectly omitted from purchases made in 2013, but entered correctly in ending inventory. These would have overstated pre-tax income and understated liabilities.

Question

Quizplus · Accepted Answer

If the items were omitted from purchases but correctly included in ending inventory, it would appear as though less was purchased and more was sold, leading to higher income and lower liabilities. Including the omitted items in purchases would decrease income and increase liabilities, correcting the overstatement and understatement.

Harris Company Has Items That Were Incorrectly Omitted from Purchases