Understatement means any ledger showing less amount then actual due to any amount missing and overstatement means any ledger account is showing more amoun then actual due to double count or double record of any transaction.
Equity will be overstated because profit is overstated.
If inventory is understated, net income is also understated because cost of goods sold will be overstated
If adjusting entry not made then profit will be overstated while the expenses will be understated.
No they will be overstated as depreciation will not have been taken into account.
If an adjustment is needed for unearned revenues, the liability is overstated and the related revenue is understated before adjustment. Another word for revenue is income.
Equity will be overstated because profit is overstated.
Understated DefinedUnderstated amounts indicate a reported amount is not correct and the reported amount is less than the true amount.Overstated DefinedOverstated is the opposite of understated in accounting terminology. Accountants use this term to describe an incorrect reported amount that is higher than the true amount.
If inventory is understated, net income is also understated because cost of goods sold will be overstated
net Accounts Receivable will be overstated.
If adjusting entry not made then profit will be overstated while the expenses will be understated.
No they will be overstated as depreciation will not have been taken into account.
expenses understated and therefore net income overstated
unaffected
If an adjustment is needed for unearned revenues, the liability is overstated and the related revenue is understated before adjustment. Another word for revenue is income.
Yes this is right statement as if some expenses are forgot to record it overstated the net income and reduces the expenses but in actual there is less net income then shown in income statement.
If Opening Stock is undervalued, this will result in your Cost of Sales being understated and therefore Gross and Net Profit being overstated. Of course, since Opening Stock in this period is the last period's Closing Stock, this would mean that Closing Stock in the last period was understated too, meaning that Net Profit in the last period was understated. That doesn't make it OK though!
Expenses are overstated and assets are overstated