As a Result of Taking a Physical Inventory Count on December

question 126

Multiple Choice

As a result of taking a physical inventory count on December 31, 2016, the Mona Lisa Company inventory was determined to be $61,500. The auditors for Mona Lisa suspected an inventory shortage and used the gross profit method to estimate the ending inventory. The accounting records for the company contained the following information:
Using the gross profit method, what did the auditors estimate as the amount of the inventory that should have been on hand at December 31, 2016?

• A) $240,000
• B) $170,000
• C) $125,000
• D) $ 61,500

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Definitions:

Probability

The measure quantifying the likelihood or chance that a particular event will occur, often expressed as a number between 0 and 1.

Null Hypothesis

The null hypothesis is a type of hypothesis used in statistics that proposes no statistical significance exists in a set of given observations, serving as the default assumption until evidence suggests otherwise.

Level of Significance

A threshold used in statistical tests to determine if the observed data sufficiently deviate from a null hypothesis.

Income Bracket

An income bracket refers to a range of incomes segmented for statistical purposes, often used in economic and policy analyses to categorize and compare individuals' or households' financial status.