Effects of Errors During the current accounting period Page Company makes the following errors. The company uses a perpetual inventory system.
Example: Failed to record a cash sale.
1. The purchase of equipment for cash is recorded as
a debit to Equipment and a credit to Accounts Payable.
2. Failed to record the purchase of inventory on credit.
3. Cash received from a customer in payment of its account
is recorded as if the receipt were for a current period sale.
4. Failed to record a credit sale.
5. At the end of the year the receipt of money from a 60-day,
12% bank loan is recorded as a debit to Cash and a credit
to Sales Revenue.
6. Failed to record depreciation at the end of the current
Indicate the effect of the errors on the net income, total assets, total liabilities, and total stockholders’ equity at the end of the accounting period by using the following code: O =overstated, U =understated, N =no effect. Disregard income taxes.