Net income at year end will be overstated if Net income at year end will be overstated ifO Prepaid expense is not recognizedAccrued income is not recognizedO Inventory at year end is understatedO Purchases during the year are understated

Option a is incorrect because if Prepaid Expenses is not recognized, it will increase our expenses…

Answered: Net income at year end will be…

Net income at year end will be overstated if O Prepaid expense is not recognized O Accrued income is not recognized O Inventory at year end is understated O Purchases during the year are understated

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 14PA: Assuming a companys year-end inventory were overstated by $5,000, indicate the effect...

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Concept explainers

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.

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Net income at year end will be overstated if

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