Assume That Ending Inventory in Fiscal 2012 Is Overstated by $1,000.What

question 91

Multiple Choice

Assume that ending inventory in fiscal 2012 is overstated by $1,000.What impact will this have on fiscal 2012 financial reporting?

• A)Retained earnings is overstated by $1,000.
• B)Gross margin is understated by $1,000.
• C)Cost of sales is overstated by $1,000.
• D)Inventory is understated on the balance sheet.

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Definitions:

Loanable Funds

The money available in financial systems for borrowing, representing the supply of funds from savers to borrowers.

Identities

Characteristics, qualities, or beliefs that make a particular person or group different from others.

Equilibrium Interest Rate

The interest rate at which the quantity of money demanded is equal to the quantity of money supplied, leading to a balance in the money market.

Loanable Funds

The supply of money available for borrowing in the financial market, determined by savings and demand for borrowing.