If a Company Overstates Its Ending Inventory Balance for 2017

question 76

Short Answer

If a company overstates its ending inventory balance for 2017 by $10,000, and understates its ending inventory balance for 2016 by $5,000 what are the effects on its net income for 2017 and 2016? ​ $\begin{array}{cc}\text { Effect on } 2017 \text { Net Income } & \text { Effect on } 2016 \text { Net Income } \\\hline \text { a. Understated by } \$ 5,000 & \text { Overstated by } \$ 10,000 \\\text { b. Overstated by } \$ 15,000 & \text { Understated by } \$ 10,000 \\\text { c. Overstated by } \$ 15,000 & \text { Understated by } \$ 5,000 \\\text { d. Overstated by } \$ 10,000 & \text { Understated by } \$ 5,000\end{array}$

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Definitions:

Monopolist

A monopolist is a market participant that has exclusive control over the market for a particular good or service, without any competition.

Vigorously On Price

An expression that may not accurately define a specific economic term but suggests active competition or negotiation around prices. NO.

Bargaining Power

The relative capacity of parties in a negotiation to exert influence over each other, often influencing the terms and conditions of agreements.

Dominant Firms

Companies that have a major share of the market sales or exert significant influence in their industry.