Because Inventory Errors Are Self-Correcting in Following Accounting Periods, Managers

question 117

True/False

Because inventory errors are self-correcting in following accounting periods, managers will be able to make correct decisions based on changes in net income and cost of goods sold.

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Definitions:

Source Document

An original record or document that contains the details of a business transaction, used as the basis for recording and validating financial data.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that a company's bookkeeping system is mathematically correct.

Credit

An accounting entry that increases liabilities or equity or decreases an asset or expense. Opposite of a debit.

Ledger

A comprehensive collection of a company's accounts that records all financial transactions.