Overstating Ending Inventory Has the Following Effect on Cost of Goods

question 32

Multiple Choice

Overstating ending inventory has the following effect on cost of goods sold and net income, respectively.

• A) Overstated, overstated
• B) Understated, overstated
• C) Overstated, understated
• D) No effect on either account

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Definitions:

Truck Differential

A mechanical component in trucks that allows the wheels to rotate at different speeds, crucial for cornering.

Carrier Housing

The outer case or structure that encloses the differential gears and bearings in a vehicle, supporting and protecting the differential assembly.

Banjo Housing

A type of housing for a differential or axle assembly that resembles a banjo in shape, allowing for the drive shaft to connect at a perpendicular angle.

Tandem Axle Configurations

A vehicle setup where two axles are placed close to each other to support a heavier load.