The Ending Inventory of XZW Was Overstated by $6,000 in 20x4.The

question 57

Multiple Choice

The ending inventory of XZW was overstated by $6,000 in 20x4.The overstatement will cause XZW's:

• A) Retained earnings to be understated by on the 20x4 balance sheet.
• B) Cost of goods sold to be understated by on the 20x5 income statement.
• C) Cost of goods sold to be overstated by on the 20x4 income statement.
• D) Income to be overstated by on the 20x5 income statement.
• E) No misstatements on the 20x5 balance sheet.

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Definitions:

Cash Payments

Financial transactions involving the transfer of currency or check from buyer to seller without the use of credit.

Dependent Child

A child who meets certain IRS criteria allowing a taxpayer to claim them for tax benefits.

Self-Employment Tax

A financial obligation made up of Social Security and Medicare fees, chiefly for people who are in self-employment.

AGI Deduction

Adjustments made to gross income to calculate the adjusted gross income (AGI), which can include contributions to retirement accounts, student loan interest, and other eligible deductions.