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A Firm Fraudulently Overstated Its December 31, 2016 and 2017

question 70

Essay

A firm fraudulently overstated its December 31, 2016 and 2017 inventories by $4,000 and $7,000, respectively. What is the amount and direction of 2016 and 2017 misstatements of cost of goods sold which results from these inventory overstatements?


Definitions:

Financial Resources

Assets and funds available to a person or organization for spending, investing, or other purposes.

Hans Selye

A Hungarian-Canadian endocrinologist known for his research on the physiological effects of stress, termed the "General Adaptation Syndrome."

Alarm Phase

The initial reaction of the body to stress, activating the sympathetic nervous system and the fight or flight response.

Adrenal Cortex

The outer part of the adrenal gland that produces steroid hormones which regulate metabolism and immunity, among other functions.

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