Charles Scrab Inc

question 49

Multiple Choice

Charles Scrab Inc. has beginning inventory of $15,000, purchases of $25,000, and ending inventory of $10,000, sales of $75,000, operating expenses of $30,000, and a tax rate of 40% for 2008. An accounting clerk input the ending inventory as $12,000. What is the effect on 2008 net income?

• A)Net income will be $1,200 higher.
• B)Net income will be $1,200 lower.
• C)Net income will be $2,000 higher.
• D)Net income will be $2,000 lower.

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Definitions:

French Goods

Products manufactured in France, known for their quality in sectors like fashion, wine, and luxury items.

Federal Individual Income Taxes

Taxes levied by the United States federal government on the annual earnings of individuals, estates, and trusts.

Ability-To-Pay Principle

The economic principle that states taxes should be levied according to an individual's or entity's capability to pay, typically measured by income or wealth.

Gasoline Taxes

Taxes imposed by governments on the sale of gasoline, often used to fund transportation infrastructure.