If Ending Inventory in Period 1 Is Understated, Cost of Goods

question 57

Multiple Choice

If ending inventory in Period 1 is understated, Cost of Goods Sold in Period 2 is:

• A)overstated.
• B)understated.
• C)not affected.
• D)the same as in Period 1.

Understand and identify the three basic forms of business organizations.

Grasp the accounting equation and its term definitions.

Comprehend the relationship between revenues, expenses, and net income.

Explain the role of accounting in the modern information age.

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay the loan.

Inadequate

Lacking the quality or quantity required; insufficient for a purpose.

Assets

Economic resources owned or controlled by an individual or entity, expected to produce future benefits.