A Retail Organization Mistakenly Did Not Include $10,000 of Inventory

question 238

Multiple Choice

A retail organization mistakenly did not include $10,000 of inventory in the physical count at the end of the year. What was the impact to the organization's financial statements?

• A) Cost of sales and net income are understated.
• B) Cost of sales and net income are overstated.
• C) Cost of sales is understated and net income is overstated.
• D) Cost of sales is overstated and net income is understated.

---

Definitions:

Director

An individual appointed or elected to the board of an organization who is responsible for overseeing and guiding the company's policies, finances, and operations.

Systems Software

The class of computer instructions that serve primarily as an intermediary between computer hardware and application programs; provides important self-regulatory functions for computer systems.

Price

The amount of money expected, required, or given in payment for something.

Hardware

The physical components of a computer system, such as the CPU, memory devices, and input/output devices.