An Error in the Physical Count of Goods on Hand $\text { Cost of Goods Sold\quad Net Income }$

question 82

Short Answer

An error in the physical count of goods on hand at the end of a period resulted in a $15,000 overstatement of the ending inventory. The effect of this error in the current period is $\text { Cost of Goods Sold\quad Net Income }$
a. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated
b. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated
c. Understated $\quad$$\quad$$\quad$$\quad$$\quad$ Overstated
d. Overstated $\quad$$\quad$$\quad$$\quad$$\quad$ Understated

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Definitions:

Royalty

Money that employees or others receive based on sales, for example an author or musician.

Percentage

A mathematical concept that represents a portion of 100, used in describing proportions and rates in various contexts.

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service.

Sales

The exchange of a commodity for money; the action of selling something.