Hollander Company Hired Some Students to Help Count Inventory During

question 2

Multiple Choice

Hollander Company hired some students to help count inventory during their semester break. Unfortunately, the students added incorrectly and the 2014 ending inventory was overstated by $5,000. What would be the effect of this error in ending inventory?

• A) 2014 net income would be overstated.
• B) 2014 net income would be understated.
• C)2014 ending retained earnings would be understated.
• D)2014 cost of goods sold would be overstateD.The overstatement of the ending inventory causes cost of goods sold to be understated and net income to be overstated.

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Definitions:

Vice President

A senior-level executive in a company who reports directly to the president or CEO, often responsible for a specific division or operation within the organization.

Treasurer

An executive or officer in a company or government agency responsible for managing financial assets, investments, and strategies for cash management.

Corporate Controller

A senior executive responsible for managing the accounting operations of a company, overseeing the financial reporting, and ensuring accuracy in accordance with accounting standards.

Tax Management

The practice of strategically planning and executing financial matters to minimize tax liabilities and maximize tax benefits.