Merchandise Inventory at the End of the Year Was Inadvertently

question 49

Multiple Choice

Merchandise inventory at the end of the year was inadvertently overstated.Which of the following statements correctly states the effect of the error on net income,assets,and stockholders' equity?

• A)net income is overstated,assets are overstated,and stockholders' equity is understated
• B)net income is overstated,assets are overstated,and stockholders' equity is overstated
• C)net income is understated,assets are understated,and stockholders' equity is understated
• D)net income is understated,assets are understated,and stockholders' equity is overstated

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Definitions:

Revenue And Spending Variances

The differences between actual revenues and expenditures compared to budgeted or forecasted amounts, often analyzed to manage and improve financial performance.

Wells Serviced

The number of oil, gas, or water wells that have undergone maintenance, repair, or evaluation activities within a given period.

Planning Budget

A budget prepared for a particular level of activity, used to gauge financial performance by comparing actual results with budgeted amounts.

Passengers

Individuals who travel in a vehicle but do not operate it, often used in the context of public or private transport services.