A $25,000 Overstatement of the 2013 Ending Inventory Was Discovered

question 92

Multiple Choice

A $25,000 overstatement of the 2013 ending inventory was discovered after the financial statements for 2013 were prepared. Which of the following describes the effect of the inventory error on the 2014 financial statements?

• A) Net income and stockholders' equity are both understated.
• B) Net income is understated and stockholders' equity is correct.
• C)Net income and stockholders' equity are both overstated.
• D)Net income and stockholders' equity are both unaffecteD.The overstatement of the 2013 ending inventory causes the 2013 net income to be overstated and the 2014 net income to be understated. Stockholders' equity at the end of 2014 is correct because inventory errors are counter-balancing.

Know how to calculate and interpret the F-statistic in one-way ANOVA.

Recognize the distribution of the test statistic in ANOVA and its significance.

Understand the concept of degrees of freedom in the context of ANOVA and how it relates to sample size and the number of groups.

Comprehend the partitioning of total variation into components attributable to treatments and error.

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Definitions:

Job Demands

Aspects of a job that require sustained physical and mental effort, which can lead to strain when matched with inadequate resources.

Time Pressure

The stress or urgency of completing tasks within a limited timeframe, which can affect performance and decision-making.

Voluntary Certification

An optional process by which individuals or organizations obtain official recognition for meeting specific standards and qualifications, typically within a professional field.

Work-life Balance

The equilibrium between professional work and personal life to ensure health, satisfaction, and effectiveness in both areas.