A $15,000 Overstatement of the 20B Ending Inventory Was Discovered

question 85

Multiple Choice

A $15,000 overstatement of the 20B ending inventory was discovered after the financial statements for 20B were prepared. What was the effect of the inventory error on the 20B financial statements?

• A) Current assets were overstated and profit was overstated.
• B) Current assets were understated and profit was overstated.
• C) Current assets were understated and profit was understated.
• D) Current assets were overstated and profit was understated.

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Definitions:

Failing to Control

A situation where an entity does not properly manage or regulate operations or processes.

Lean Manufacturing

A systematic method for waste minimization within a manufacturing setup without sacrificing productivity, focusing on enhancing value for the customer.

Financial Accounting Information

refers to data pertaining to the financial status and performance of an organization, including its income, expenses, assets, and liabilities.

Nonfinancial Measures

Metrics used to assess performance in areas not directly related to financial outcomes, such as customer satisfaction or employee engagement.