If Ending Inventory on December 31, 2011, Is Overstated by $60,000

question 135

Multiple Choice

If ending inventory on December 31, 2011, is overstated by $60,000, what is the effect on net income for 2012?

• A) Net income is overstated by $60,000
• B) Net income is understated by $60,000
• C) Net income is overstated by $120,000
• D) The answer cannot be determined from the information given

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Definitions:

Free-Market Intent

The overarching aim or philosophy of allowing market forces of supply and demand to operate with minimal government intervention.

Agricultural Policy

A set of laws and regulations implemented by governments to stabilize agricultural markets, support farm income, and encourage agricultural production.

Freedom To Farm Act

Legislation enacted to give farmers more flexibility in the planting choices of crops, aiming to make American agriculture more market-driven.

Reduced Export Demand

A situation where there is a decline in the international demand for a country's goods or services, often affecting the exporting country's economy.