Final answer:
The understatement of ending inventory by $36,000 in 2014 will cause the net income for 2015 to be overstated by the same amount. For the sample calculation, the firm's accounting profit is $50,000, determined by subtracting the total expenses from sales revenue.
Step-by-step explanation:
An error that understated ending inventory will have an effect on the reported net income for the following year. If RLR Corporation's December 31, 2014, ending inventory was understated by $36,000, it means that the cost of goods sold (COGS) for 2014 was overstated by that amount because ending inventory is subtracted from goods available for sale to determine COGS. This would have led to a lower net income in 2014. However, in 2015, the starting inventory would be understated by the same amount, which would, in turn, understate the COGS for 2015, assuming no other errors. Therefore, the net income for 2015 would be overstated by the $36,000 that was initially understated in 2014's ending inventory.
Using the information provided, the firm's accounting profit can be calculated by subtracting the total expenses (labor, capital, materials) from the sales revenue. The firm's accounting profit would be: $1,000,000 (sales revenue) - $600,000 (labor) - $150,000 (capital) - $200,000 (materials) = $50,000.