If Cost of Goods Sold for the Year Was Overstated

question 23

Multiple Choice

If cost of goods sold for the year was overstated, but all other financial statement items were properly reported, the calculated inventory turnover ratio would:

• A)indicate the chance of running out of inventory was lower than it was.
• B)be unaffected by this error.
• C)indicate the company was more profitable than it actually was.
• D)indicate that inventory was being turned over more times than it was.

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Definitions:

Hypnotized

A state of highly focused attention or concentration, often associated with relaxation and heightened suggestibility.

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A medical procedure involving the administration of drugs to temporarily eliminate sensation, typically to allow surgical procedures to be performed without pain.

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A period in human development generally ranging from birth to eight years old, during which the foundations of physical, emotional, and intellectual growth are laid.

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Events or situations that result in significant distress and discomfort on an emotional level.