If Gross Profit Is Overstated in Period 1, Then the Ending

question 64

Multiple Choice

If gross profit is overstated in Period 1, then the ending inventory and net income in Period 1 were respectively:

• A)overstated, and understated.
• B)overstated, and overstated.
• C)understated, and overstated.
• D)understated, and understated.

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Definitions:

Payable To Bearer

Payable to bearer describes a financial instrument, such as a check or bond, that is payable to the holder or presenter of the document, rather than a specific individual.

Issued

Pertains to the official distribution or release of something, such as a document, currency, or product.

Holder

Any person in the possession of an instrument drawn, issued, or indorsed to him or her, to his or her order, to bearer, or in blank.

Promise

A person’s assurance that he or she will or will not do something.