An Understatement of the Ending Inventory in Year 1, If

question 112

Multiple Choice

An understatement of the ending inventory in Year 1, if not corrected, will cause which of the following?

• A)The year 1 net income to be understated and Year 2 net income to be overstated.
• B)The year 1 net income to be overstated and Year 2 net income to be overstated.
• C)The year 1 net income to be overstated and Year 2 net income will be correct.
• D)The year 1 net income to be overstated and Year 2 net income to be understateD.The understatement of the year 1 ending inventory causes the year 1 cost of goods sold to be overstated and the year 1 net income is therefore understated.The year 2 cost of goods sold is understated because beginning inventory is understated, which causes the year 2 net income to be overstated.

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Definitions:

Energizing Commitment

Stimulating a strong dedication or allegiance towards a goal, project, or cause.

Describing A Future State

The process of articulating a vision or detailed description of a desired outcome or situation that an organization or individual aspires to achieve in the future.

Creating A Vision

Creating a vision involves formulating a clear and inspirational idea of what an organization or individual aims to achieve in the future, guiding decisions and actions.

Managing The Transition

The process of guiding and supporting individuals, teams, or organizations through significant changes or developments.