If a Company Overstates Its Inventory Balance at the End

question 82

True/False

If a company overstates its Inventory balance at the end of 2015 due to an error,its Retained Earnings will also be overstated on the 2015 balance sheet.

---

Definitions:

Receivable into Cash

The process or activity of converting money that is owed to a company by its customers into actual cash, usually through collection efforts.

Excess Cash

Funds that exceed the normal operating needs of a company, which might be used for investments, acquisitions, or improving financial ratios.

Marketable Securities

Financial instruments that can easily be converted to cash due to their high demand and short maturity period.

Lockbox System

A service offered by banks to companies for the receipt of payment from customers, under which payments are sent directly to a location accessible by the bank.