An Error in the Physical Count of Goods on Hand

question 160

Short Answer

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is $$\begin{array} { l c c } & \text { Cost of Goods Sold } & \text { Net Income } \\\text { a. } & \text { Understated } & \text { Understated } \\\text { b. } & \text { Overstated } & \text { Overstated } \\\text { c. } & \text { Understated } & \text { Overstated } \\\text { d. } & \text { Overstated } & \text { Understated }\end{array}$$

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Definitions:

Duty To Warn

An ethical and legal responsibility of certain professionals to disclose information to prevent harm to a third party.

Permission To Warn

A principle that may allow a professional, under certain conditions, to breach confidentiality in order to warn a third party of potential danger.

Laws

The system of rules that are created and enforced through social or governmental institutions to regulate behavior.

Complicated Consent Forms

Documents that are difficult to understand due to their complexity, often used in medical and research settings, which can hinder informed decision-making.