An Understatement of Ending Inventory in One Period Results In

question 98

Multiple Choice

An understatement of ending inventory in one period results in:

• A) an overstatement of net income for the next period.
• B) no effect on net income for the next period.
• C) an overstatement of the ending inventory for the next period.
• D) an understatement of net income for the next period.

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Definitions:

Cost Of Goods

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor.

Master Budget

An all-encompassing financial planning document that consists of various individual budgets, which detail a company's financial goals, strategies, and operational plans.

Finished Goods

These are products that have completed the manufacturing process and are ready to be sold to customers.

Finished Goods

Items that have finished being manufactured and are prepared for purchase.