An Overstatement of Ending Inventory in One Period Results in

question 118

Multiple Choice

An overstatement of ending inventory in one period results in

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

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Definitions:

Units

In economics, units refer to the quantifiable measures used to express the quantity of an item, such as pieces, kilograms, liters, etc., used in transactions or production.

Total Cost

The complete cost of production, encompassing both fixed and variable costs, for a good or service.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; decreases as production increases.

Average Variable Cost

The per unit cost of variable inputs divided by the total quantity of output produced, reflecting the variable cost of production.