At the balance sheet date Clarkson
Company held title to goods in transit amounting to $214,000. This
amount was omitted from the purchases figure for the year and also from
the ending inventory. What is the effect of this omission on the net
income for the year as calculated when the books are closed? What is the
effect on the company financial position as shown in its balance
sheet? Is materiality a factor in determining whether an adjustment for
this item should be made?
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