A Company Uses the Periodic Inventory Method and the Beginning $\begin{array} { cc } &\underline { \text { Assets } } &\underline{ \text { Stockholders' Equity } }\\\end{array}$

question 24

Short Answer

A company uses the periodic inventory method and the beginning inventory is overstated by $7,000 because the ending inventory in the previous period was overstated by $7,000. The amounts reflected in the current end of the period balance sheet are $\begin{array} { cc } &\underline { \text { Assets } } &\underline{ \text { Stockholders' Equity } }\\\end{array}$
A) $\begin{array} { cc } \text { Overstated } & \text { Overstated } \\\end{array}$
B) $\begin{array} { cc } \text {Correct } &&& \text { Correct } \\\end{array}$
C) $\begin{array} { cc } \text { Understated } & \text { Understated } \\\end{array}$
D) $\begin{array} { cc } \text { Overstated } && \text { Correct }\end{array}$

• A)\(\begin{array} { cc } \text { Overstated } & \text { Overstated } \\\end{array}\)
• B)\(\begin{array} { cc } \text {Correct } &&& \text { Correct } \\\end{array}\)
• C)\(\begin{array} { cc } \text { Understated } & \text { Understated } \\\end{array}\)
• D)\(\begin{array} { cc } \text { Overstated } && \text { Correct }
• \end{array}\)

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Definitions:

Change Blindness

A phenomenon in which a person does not notice a significant change in the visual scene when the change occurs outside the center of attention.

Hypnagogic Sensations

Vivid sensory phenomena that occur during the onset of sleep, including visual, auditory, or tactile hallucinations.

REM Rebound

The increase in REM sleep that occurs after a period of REM sleep deprivation.

Selective Attention

The mental process of concentrating on one particular piece of information while disregarding other data that can be sensed.