Mineral Makers (MM) Company Keeps Its Inventory Records Using a Perpetual

question 25

Multiple Choice

Mineral Makers (MM) Company keeps its inventory records using a perpetual system.At December 31, 2015, the unadjusted balance in the inventory account is $64,000.Through a physical count on December 31, 2015, MM determines that its actual merchandise inventory at year-end is $62,500.Which of the following is true regarding the statement of financial position and the income statement of MM at December 31, 2015?

• A)Inventory is increased and cost of goods sold is decreased by $1,500.
• B)Inventory is decreased and cost of goods sold is increased by $1,500.
• C)Inventory is increased and cost of goods sold is increased by $1,500.
• D)Inventory is decreased and cost of goods sold is decreased by $1,500.

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Definitions:

Experimental Methods

Research designs involving the manipulation of variables to determine cause-and-effect relationships.

Nonexperimental Methods

Research designs that do not involve the manipulation of variables or random assignment of participants.

Randomization

Controlling for the effects of extraneous variables by ensuring that the variables operate in a manner determined entirely by chance.

Experimental Control

Eliminating the influence of an extraneous variable on the outcome of an experiment by keeping the variable constant in the experimental and control groups.