If Purchases Are Recorded Correctly but Ending Physical Inventory Is

question 16

Multiple Choice

If purchases are recorded correctly but ending physical inventory is understated, which one of the following situations occurs for the current year?

• A)Working capital is understated and net income is overstated.
• B)Working capital and net income are understated.
• C)Working capital is overstated and net income is understated.
• D)Working capital and net income are overstated.

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Definitions:

Alabama

A state in the southeastern region of the United States, known for its significant role in American civil rights history, agricultural output, and cultural heritage.

Mississippi

Mississippi is a state in the southern United States, known for its rich cultural heritage, historical significance in the civil rights movement, and as a major site of agricultural production.

Missouri

A state in the central United States known for its diverse geography and as the starting point for the Lewis and Clark expedition.