Tang, IncSells Collectible Jewelry on Consignment from Various Manufacturers

question 44

Multiple Choice

Tang, Inc.sells collectible jewelry on consignment from various manufacturers.Additionally, Tang sells its own line of specialty jewelry manufactured in-house.On December 31, 2011, during Tang, Inc 's annual inventory count, an inexperienced new staff member included in Tang's ending inventory $350,000 worth of inventory held on consignment from Metcalf Associates.Which of the following is correct regarding the impact of this error on Tang's income statement and statement of financial position at December 31, 2011?

• A)Ending inventory is understated by $350,000.
• B)Retained earnings is overstated by $350,000.
• C)Cost of goods sold is overstated by $350,000.
• D)The financial statements are correctly stated.

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Definitions:

Structuring

The process of organizing or arranging components in a systematic, coherent manner.

Solicited Proposals

Proposals that are requested by an organization or individual, often through a formal process, to address specific needs or projects.

External Party

An individual or group outside of an organization that has a stake or interest in the business, such as suppliers, customers, or regulatory bodies.

Significant Factor

An element or aspect that has a major impact on the outcome or understanding of a situation or study.