Assume That Ending Inventory in Fiscal 2016 Is Overstated by $1,000.What

question 61

Multiple Choice

Assume that ending inventory in fiscal 2016 is overstated by $1,000.What impact will this have on fiscal 2016 financial reporting?

• A)Retained earnings is overstated by $1,000.
• B)No effect on inventory value on the balance sheet.
• C)No effect on retained earnings.
• D)Inventory is understated on the balance sheet.

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Definitions:

Proximity

The physical or psychological closeness between people, objects, or ideas, which can influence their interaction and relationship.

Grouping

The cognitive process of organizing objects or thoughts into groups based on common attributes, which is fundamental to perception and pattern recognition.

Perceptual Organization

The process by which the brain structures and interprets sensory information to represent the environment.

Openness

A personality trait that features characteristics such as imagination and insight, and those high in this trait also tend to have a broad range of interests.