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During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $229,134 instead of the correct amount of $165,639. The effect on the balance sheet and income statement would be

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Zviko

Answer:

Assets will be overstated and Net Income understated

Explanation:

The effect on the balance sheet and income statement

Balance Sheet :

Inventory will be overstated

Inventory belongs to the Current Asset group

Meaning Assets will be overstated

Income Statement :

Inventory will be overstated

This reduces cost of sales with an amount greater

Meaning Profits will be overstated

Conclusion

The effect on the balance sheet and income statement would be : Assets will be overstated and Net Income understated.

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