Answer to Question #183329 in Accounting for Milan

Question

What does it mean when you Overstate your Revenues?

What does it mean when you Understate your Revenues?

What does it mean when you Overstate your Liabilities?

What does it mean when you Understate your Liabilities?

What does it mean when you Understate your Equity?

What does it mean when you Overstate your Equity?

What does it mean when you Overstate your Retained Earnings?

What does it mean when you Understate your Retained Earnings?

What does it mean when you Understate your Beginning Inventory?

What does it mean when you Overstate your Beginning Inventory?

What does it mean when you Overstate your Cost of Goods Available for Sale?

What does it mean when you Understate your Cost of Goods Available for Sale?

What does it mean when you Understate your Purchases account?

What does it mean when you Overstate your Purchases account?

What does it mean when you Overstate your Sales account?

What does it mean when you Understate your Sales account?

Answer 1

Solution:

What does it mean when you Overstate your Revenues? – This means recording revenue for sales that are yet to occur.

What does it mean when you Understate your Revenues? – This means the amount of revenue recorded is less than the actual amount.

What does it mean when you Overstate your Liabilities? – This means showing inflated amounts of your obligations on the balance sheet.

What does it mean when you Understate your Liabilities? – This means showing fewer obligations than the actual amounts on the balance sheet.

What does it mean when you Understate your Equity? – This means that shareholder's stake on the balance sheet is deflated. This is due to the understatement of assets and overstatement of liabilities.

What does it mean when you Overstate your Equity? - This means that shareholder's stake on the balance sheet is inflated. This is due to the overstatement of assets and the understatement of liabilities.

What does it mean when you Overstate your Retained Earnings? – This means showing an inflated amount of retained earnings on the balance sheet due to an overstatement in gross profit, or net income as a result of inventory overstatement.

What does it mean when you Understate your Retained Earnings? – This means that a less amount of retained earnings is reported on the balance sheet. This is due to an understatement in gross profit, or net income as a result of inventory understatement.

What does it mean when you Understate your Beginning Inventory? – This means showing less opening inventory than the actual amount on the balance sheet.

What does it mean when you Overstate your Beginning Inventory? – This means showing an inflated amount of opening inventory than the actual amount on the balance sheet.

What does it mean when you Overstate your Cost of Goods Available for Sale? – This means reporting a high amount of cost of sales than the required. This is mostly due to an overstatement of beginning inventory.

What does it mean when you Understate your Cost of Goods Available for Sale? - This means reporting a less amount of cost of sales than the required. This is mostly due to an understatement of beginning inventory.

What does it mean when you Understate your Purchases account? – This means that the reported amount of purchases on the income statement is less than the actual amount.

What does it mean when you Overstate your Purchases account? - This means that the reported amount of purchases on the income statement is exaggerated than the actual amount.

What does it mean when you Overstate your Sales account? – This means that the reported sales amount on the income statement is more than the actual sales.

What does it mean when you Understate your Sales account? – This means that the revenue reported on the income statement is lower than the actual amount.