When the Current Year's Ending Inventory Amount Is Overstated, the

question 126

Multiple Choice

When the current year's ending inventory amount is overstated, the

• A) Current year's cost of goods sold is overstated
• B) Current year's total assets are understated
• C) Current year's net income is overstated
• D) Next year's income is overstated

---

Definitions:

Spendthrift Trust

A legal arrangement that prevents the beneficiary's creditors from accessing the trust funds, providing long-term financial security for the beneficiary.

Spendthrift Provisions

Clauses in trust agreements that prevent beneficiaries from squandering their inheritances or creditors from claiming the trust assets.

Trust Corpus

The principal amount or assets held in trust, as differentiated from the income generated by those assets.

Consideration

Something of value exchanged by parties in a contract that induces them to enter into the agreement.