Question

If samson goods, inc. records its beginning inventory and purchases, but fails to include some items in ending inventoryn. what is the effect on the financial statements?

Answer 1

If Samson Goods, Inc. fails to include some items in its ending inventory, this will impact the financial statements. The value of ending inventory will be understated on the balance sheet, and the cost of goods sold will be overstated on the income statement.

Step-by-step explanation:

If Samson Goods, Inc. fails to include some items in its ending inventory, there will be an impact on the financial statements. This error affects both the balance sheet and income statement. On the balance sheet, the value of ending inventory will be understated, resulting in lower assets and retained earnings. On the income statement, the cost of goods sold will be overstated, leading to a decrease in gross profit and net income.