Match Each Situation to Its Impact (A-C) on the Current

question 65

Multiple Choice

Match each situation to its impact (a-c) on the current year's net income.
-Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's ending inventory.

• A)Net income for the current year will be overstated.
• B)Net income for the current year will be understated.
• C)There will be no error effect on net income.

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Definitions:

Accounts Receivable Collection

The process of recovering funds that are due from customers who have purchased goods or services on credit.

Customer Discount

A reduction in the price of goods or services offered to buyers, often used as a sales promotion strategy.

Marketable Securities

Assets that can be rapidly turned into cash at an acceptable value.

Restrictive Short-Term Financial

Financial policies or practices that limit short-term borrowing or spending in order to achieve long-term financial stability.