Zirkle Company Understated Its Ending Inventory

question 102

Multiple Choice

Zirkle Company understated its ending inventory.Which of the following answers correctly states the effect of the error in the present period?

• A)Overstatement of total assets and cost of goods sold.
• B)Overstatement of cost of goods sold and retained earnings.
• C)Understatement of liabilities and retained earnings.
• D)Understatement of total assets and gross margin.

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Definitions:

Short-term Memory

The ability to keep a limited amount of data in a readily accessible and active condition for a brief duration.

Sensory

Pertaining to the senses or sensation.

Implicit

Something that is implied or understood though not directly expressed or stated.

Echoic Memory

A component of sensory memory that specifically stores auditory information, allowing sounds and words to be retained for a brief period after being heard.