Zebra Company Overstated Its December 31, 2014 Inventory by $5,200

question 25

Multiple Choice

Zebra Company overstated its December 31, 2014 inventory by $5,200.Which statement is true concerning
Zebra's financial statement amounts for 2014?

• A)Working capital is understated.
• B)The current ratio is overstated.
• C)Cost of goods sold is overstated.
• D)Net income is understated.

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Definitions:

Operating Activities

Business functions directly related to providing goods or services, such as sales, production, and day-to-day administration.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset’s consumption or wear and tear.

Accounts Receivable

Accounts receivable is a balance sheet item representing money owed to a business for goods or services delivered but not yet paid for by customers.

Indirect Statement

A financial statement method typically used in cash flow statements to adjust net income for changes in non-cash accounts.