Use the Following Information for Question 102-103

question 153

Multiple Choice

Use the following information for question 102-103.
During its December 31, 2014 year-end inventory count, Jefferson Company failed to count items in transit to which it had legal title. As a result of this error, ending inventory was understated by $30,000.
-As a result of this error, 2014 cost of goods sold will be

• A) understated by $30,000.
• B) overstated by $30,000.
• C) correct.
• D) greater when average cost is used.

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Definitions:

Expected Value

A statistical concept representing the average outcome of a random event when the process is repeated many times.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Relevant Instances

Specific examples or cases that are directly connected to the subject matter being discussed or analyzed.

Probability

The likelihood or chance of an event occurring.