Understating the Ending Inventory Causes the Cost of Goods Sold

question 22

True/False

Understating the ending inventory causes the cost of goods sold to be overstated and net income to be understated.

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Definitions:

Insurance Expense

The cost incurred by an entity for obtaining insurance coverage, typically recognized as an expense in the income statement.

Adjusting Entry

An accounting entry made at the end of a period to allocate income and expenditure to the appropriate years.

IFRS

International Financial Reporting Standards are a set of accounting guidelines that govern how companies prepare and present their financial statements internationally.

Income

The money received, especially on a regular basis, for work, through investments, or from business activities.