An Error in the Ending Inventory for the Year Ended

question 21

Multiple Choice

An error in the ending inventory for the year ended December 31, 2019:

• A) has no effect on the 2019 financial statements but will create an error in the 2020 financial statements
• B) affects only the 2019 financial statements
• C) automatically creates errors in cost of goods in the 2019 and 2020 financial statements
• D) automatically creates errors in the ending inventory balance in the 2019 and 2020 financial statements

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Definitions:

Economic Order Quantity

The ideal order size that minimizes the total inventory holding costs and ordering costs in inventory management.

Waiting Time

The duration a customer or item spends in line or in a queue before being served or processed.

Specific Order

A production or purchase order for goods or services tailored to a particular customer's requirements.

Production Time

The duration required to complete the manufacturing process of a product, from raw materials to finished goods.