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

question 32

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)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:

Serous Fluid

A clear, pale yellow fluid that fills the space between the membranes lining the body cavities and surrounding internal organs.

Peritoneal Cavity

The potential space within the abdomen that contains the intestines, liver, and other abdominal organs, enclosed by the peritoneum.

Intussusception

A medical condition where part of the intestine folds into another section of the intestine, leading to blockage.

Melena

The passage of black, tarry stools, indicative of gastrointestinal bleeding.