If Cost of Goods Sold for the Year Was Overstated

question 30

Multiple Choice

If cost of goods sold for the year was overstated, but all other financial statement items were properly reported, the calculated inventory turnover ratio would:

• A)indicate the chance of running out of inventory was lower than it was.
• B)indicate the company was more profitable than it actually was.
• C)be unaffected by this error.
• D)indicate that inventory was being turned over more times than it was.

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Definitions:

Tooth Decay

A dental condition characterized by the destruction of enamel, dentin, and/or cementum due to acid production resulting from bacterial fermentation of food debris on tooth surfaces.

Alpha

In statistics, alpha represents the level of significance, the probability of rejecting the null hypothesis when it is true, often set at 0.05.

Unemployment Rate

The fraction of people in the labor force who are without jobs and are looking for employment.

Random Sample

A subset of individuals chosen from a larger set (population) in such a way that every member has an equal chance of being included.