Ending Inventory for the Year Ended December 31, 2010, Is

question 81

Multiple Choice

Ending inventory for the year ended December 31, 2010, is overstated by $10,000. How will this affect net income for 2011?

• A)Net income for 2011 will be understated by $10,000.
• B)Net income for 2011 will be overstated by $10,000.
• C)Net income for 2011 will be understated by $20,000.
• D)Net income for 2011 will be overstated by $20,000.

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Definitions:

One-tailed Test

A statistical test where the region of rejection is on only one side of the sampling distribution.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it is a threshold used to determine the critical region for statistical significance testing.

Test Statistic

A figure determined from data samples, which is used during a hypothesis test to evaluate whether to refuse the null hypothesis.

Type I Error

An erroneous denial of a valid null hypothesis, commonly called a "false positive."