Answer: COGS overstated and Net Income understated
In accounting /accountancy adjusting entries are journal entries usually made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred. The revenue recognition principle is the basis of making adjusting entries that pertain to unearned and accrued revenues under accrual-basis accounting .They are sometimes called Balance Day …
Accounting scandals are business scandals which arise from intentional manipulation of financial statements with the disclosure of financial misdeeds by trusted executives of corporations or governments. Such misdeeds typically involve complex methods for misusing or misdirecting funds overstating revenues understating expenses overstating the value of corporate assets or …
Capital formation is a concept used in macroeconomics national accounts and financial economics.Occasionally it is also used in corporate accounts. It can be defined in three ways: It is a specific statistical concept also known as net investment used in national accounts statistics econometrics and macroeconomics. In that sense it refers to a measure of the net additions to the …
A royalty is a payment made by one party to another that owns a particular asset for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such but there are also other modes and metrics of compensation.
Debits and credits occur simultaneously in every financial transaction in double-entry bookkeeping. In the accounting equation Assets = Liabilities + Equity so if an asset account increases (a debit (left)) then either another asset account must decrease (a credit (right)) or a liability or equity acc…