Inventory Errors

Question 1

What is counterbalancing with respect to inventory?

Answer 1

Counterbalancing simply means the the effect of the inventory error in the following year is opposite that o the prior year. A prior period adjustment dates for the beginning of the current year is then created

Question 2

Inventory Equation

BI + P = EI COGS

Answer 2

Inventory Equation

BI + P = EI COGS