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1. Interest expense of $3,000 was not accrued at the end of Year 1. Amount was paid and expensed in Year 2 instead. Year 1 Net Income Impact Year 2 Net Income Impact 2. Supplies account at the end of Year 1 was not adjusted for supplies used. The supplies account was reduced in Year 2. Year 1 Net Income Impact Year 2 Net Income Impact 3. An error in the input of salvage values and useful lives into the depreciation system resulted in an overstatement of depreciation expense by $5,000 in Year 1. Depreciation expense was calculated correctly in Year 2. Year 1 Net Income Impact Year 2 Net Income Impact 4. A $5,000 accrual for vacation earned in Year 1 (but taken in Year 2) was not included in the financial statements in Year 1. Year 1 Net Income Impact Year 2 Net Income Impact 5. The insurance premium of $800 covering Year 2, and paid in December of Year 1 was expensed in Year 1. Year 1 Net Income Impact 2020 Net Income Impact 

          1. Interest expense of $3,000 was not accrued at the end of Year 1. Amount was paid and expensed in Year 2 instead.
Year 1 Net Income Impact Year 2 Net Income Impact
2. Supplies account at the end of Year 1 was not adjusted for supplies used. The supplies account was reduced in Year 2.
Year 1 Net Income Impact Year 2 Net Income Impact
3. An error in the input of salvage values and useful lives into the depreciation system resulted in an overstatement of depreciation expense by $5,000 in Year 1. Depreciation expense was calculated correctly in Year 2.
Year 1 Net Income Impact Year 2 Net Income Impact
4. A $5,000 accrual for vacation earned in Year 1 (but taken in Year 2) was not included in the financial statements in Year 1.
Year 1 Net Income Impact Year 2 Net Income Impact
5. The insurance premium of $800 covering Year 2, and paid in December of Year 1 was expensed in Year 1.
Year 1 Net Income Impact 2020 Net Income Impact
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1. Interest expense of 3,000 was not accrued at the end of Year 1. Amount was paid and expensed in Year 2 instead. Year 1 Net Income Impact Year 2 Net Income Impact 2. Supplies account at the end of Year 1 was not adjusted for supplies used. The supplies account was reduced in Year 2. Year 1 Net Income Impact Year 2 Net Income Impact 3. An error in the input of salvage values and useful lives into the depreciation system resulted in an overstatement of depreciation expense by5,000 in Year 1. Depreciation expense was calculated correctly in Year 2. Year 1 Net Income Impact Year 2 Net Income Impact 4. A 5,000 accrual for vacation earned in Year 1 (but taken in Year 2) was not included in the financial statements in Year 1. Year 1 Net Income Impact Year 2 Net Income Impact 5. The insurance premium of800 covering Year 2, and paid in December of Year 1 was expensed in Year 1. Year 1 Net Income Impact 2020 Net Income Impact

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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Impact of Errors on Income Statement Trinity Company discovered the following errors in Year 2. Required: a. Indicate how each item would impact net income in Year 1 (overstatement, understatement, or no effect). b. Indicate how each item would impact net income in Year 2 (overstatement, understatement, or no effect). 1. Interest expense of $3,000 was not accrued at the end of Year 1. The amount was paid and expensed in Year 2 instead. Year 1 Net Income Impact: Overstatement Year 2 Net Income Impact: Understatement 2. The supplies account at the end of Year 1 was not adjusted for supplies used. The supplies account was reduced in Year 2. Year 1 Net Income Impact: Overstatement Year 2 Net Income Impact: Understatement 3. An error in the input of salvage values and useful lives into the depreciation system resulted in an overstatement of depreciation expense by $5,000 in Year 1. Depreciation expense was calculated correctly in Year 2. Year 1 Net Income Impact: Overstatement Year 2 Net Income Impact: No effect 4. A $5,000 accrual for vacation earned in Year 1 (but taken in Year 2) was not included in the financial statements in Year 1. Year 1 Net Income Impact: Understatement Year 2 Net Income Impact: Overstatement 5. The insurance premium of $800 covering Year 2, and paid in December of Year 1, was expensed in Year 1. Year 1 Net Income Impact: Overstatement Year 2 Net Income Impact: No effect
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00:01 Hello students in this question.
00:02 We have to state the errors to a the common mistake.
00:05 You emitted this hand for an underrated during the year for 34 ,900 so the first is revenues overstated by 34 ,900 they can his expenses not affected...
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