An Understatement of the Ending Inventory Balance Will Understate Cost

question 114

True/False

An understatement of the ending inventory balance will understate cost of goods sold and overstate net income.

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Definitions:

Return On Sales

A financial ratio that calculates how efficiently a company turns sales into pretax profit.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit.

Opportunity Cost Of Capital

The potential return that is forfeited when one investment is chosen over another.

Return On Assets

A measure of a corporation's profitability, indicating how efficient it is in using its assets to produce profit.