Under the Periodic Inventory Method, If Merchandise Is Sold for Cash

question 68

Multiple Choice

Under the periodic inventory method, if merchandise is sold for cash on December 31 and is recorded as a sale but is NOT shipped (and thus is included in the ending inventory count) , the financial statements will

• A) Overstate assets
• B) Understate net income
• C) Understate liabilities
• D) Understate assets

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Definitions:

Centered Moving Average

A method of smoothing data by calculating averages of different subsets of the full data set to identify trends.

Quadratic Model

A statistical or mathematical model in which the relationship between the dependent variable and one or more independent variables is represented by a second-degree polynomial.

Time Series

A sequence of data points collected or recorded at successive points in time, typically with equal intervals between them.

Seasonal Index

A factor used in time series analysis that adjusts for the seasonality of data, reflecting typical fluctuations that occur at specific times of the year.