If a Company Mistakenly Counts Less Items During a Physical

question 113

Multiple Choice

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?

• A) understated
• B) overstated
• C) no change
• D) only inventory will be affected

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Definitions:

Public Good

An item or service made available at no cost to everyone in society, delivered by public institutions, private organizations, or individuals without aiming for financial gain.

Marginal Cost

The cost of producing one additional unit of a good or service, a concept crucial for understanding economic decision-making and pricing strategies.

Positive Externalities

Benefits that result from a commercial activity experienced by others who are not directly involved in the transaction or activity.

Spillover Benefits

The positive effects experienced by third parties or the wider community from an economic transaction or activity, which are not reflected in the market price.