Match Each Situation to Its Impact (A-C) on the Current

question 190

Multiple Choice

Match each situation to its impact (a-c) on the current year's net income.
-A consignor included merchandise in the hands of the consignee in ending inventory.

• A)Net income for the current year will be overstated.
• B)Net income for the current year will be understated.
• C)There will be no error effect on net income.

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Definitions:

FIFO Method

An inventory valuation method where the first goods purchased or produced are the first ones removed from inventory and sold, standing for "first-in, first-out."

Equivalent Unit

An equivalent unit measures a portion of completed goods in terms of an equal number of fully completed units, used in cost accounting to assess production and inventory.

Current Period

Refers to the present accounting period or cycle in which business transactions are being recorded and reported.

Nearest Cent

Rounding a monetary amount to the closest cent, often used in financial transactions to avoid fractions of a cent.