Which Assertion for Ending Inventory Is Most Likely Violated If

question 28

Multiple Choice

Which assertion for ending inventory is most likely violated if the gross profit percentage is much greater than last year?

• A)Existence.
• B)Completeness.
• C)Rights and obligations.
• D)Valuation and allocation.

---

Definitions:

Completed Contract Method

An accounting technique used to recognize revenue and expenses of long-term contracts only after the project is completed.

Revenue Recognition

This is an accounting principle that outlines the specific conditions under which revenue is recognized and can be reported in financial statements.

Percentage-Of-Completion Method

The percentage-of-completion method is an accounting approach used for recognizing the revenue and expenses of long-term contracts based on the progress of the work performed.

Revenue Recognition

The process of recording income when it is earned and realizable, according to specific criteria, regardless of when the cash is received.