During 2020,  Company discovered that the ending inventories on its financial statements were incorrect by the following amounts:                 2018                                       P120,000                 2019                                         150,000 company uses the periodic system to ascertain year-end quantities that are converted to peso amounts using FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, how much would be the accumulated profits and losses of company at January 1, 2020? A. P150,000 overstated B. P30,000 overstated C. 0 D. P270,000 overstated

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A:

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Q: The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost…

A:

Q: During 2021, WMC Corporation discovered that its ending inventories reported on its financial…

A: The answer is stated below:

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Q: The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost…

A: The answer is as fallows

Q: Assume that the prior period error effect is considered to be material.

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Q: ABC Company experienced a decline in the value of its inventory in 2020 which resulted in a…

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.