Accounting for IGCSE & O level - Accounting Procedures (Section 19 - No. 47)
What is the effect on the statement of financial position if an item of inventory costing $1,000 was accidentally omitted from the year-end inventory count?
Assets and owner's equity are overstated.
Assets and owner's equity are understated.
Assets are understated and owner's equity is unaffected.
There is no impact on the financial position.
Explanation
Omitting inventory means understating assets and ultimately, owner's equity.
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