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How can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement

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Question

Problem 13-20A Supply missing balance sheet numbers;The bookkeeper for Lowell?s Country Music Bar left this incomplete balance sheet. Lowell?s;working capital is $90,000 and its debt to assets ratio is 40 percent.;Assets;Current assets Cash. $ 21,000;Accounts receivable Inventory 42,000;Inventory (A);Prepaid expenses 9,000;Total current assets (B);Long-term assets;Building (C);Less: Accumulated depreciation (39,000);Total long-term assets 210,000;Total assets (D);Liabilities and Stockholders? Equity;Liabilities.;Current liabilities;Accounts payable $ (E);Notes payable 12,000;Income tax payable. 10,500;Total current liabilities 37,500;Long-term liabilities;Mortgage payable (F);Total liabilities. (G);Stockholders? equity;Common stock 105,000;Retained earnings. (H);Total stockholders? equity. (I);Total liabilities and stockholders? equity (J);Complete the balance sheet by supplying the missing amounts.;Why are externally presented reports required to be prepared according to generally accepted accounting principles while internally presented managerial accounting reports are not?;Case Analysis;How can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement? Give an example of an error that occurs on one financial statement and the error flows through to a second financial statement.

 

Paper#23600 | Written in 18-Jul-2015

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