If Ending Inventory Is Understated by $7,000 in 20X3,and Assuming

question 101

Multiple Choice

If ending inventory is understated by $7,000 in 20X3,and assuming a constant 30% tax rate,then what will be the effect on gross profit in 20X3?

• A)20X3 gross profit will be understated by $2,100.
• B)20X3 gross profit will be understated by $4,900.
• C)20X3 gross profit will be overstated by $4,900.
• D)20X3 gross profit will be understated by $7,000.
• E)20X3 gross profit will be overstated by $7,000.

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Definitions:

Pure Monopolist

An entity that is the sole supplier of a unique product or service without close substitutes, giving it significant control over the market price.

Total Revenue

The total amount of money received by a company from its sales of goods or services, not accounting for any costs.

Economic Profit

The surplus generated after subtracting both direct and indirect expenses from the total revenue.

Pure Monopolist

A company or entity that is the sole provider of a particular product or service, without close substitutes, in a market.