An Error in the Ending Inventory for the Year Ended

question 52

Multiple Choice

An error in the ending inventory for the year ended December 31, 2010:

• A)automatically creates errors in cost of goods in the 2010 and 2011 financial statements.
• B)has no effect on the 2010 financial statements, but will create an error in the 2011 financial statements.
• C)automatically creates errors in the ending inventory balance in the 2010 and 2011 financial statements.
• D)affects only the 2010 financial statements.

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Definitions:

Allocation of Resources

The process of distributing scarce resources among different uses and users.

Resource Use

The manner in which natural resources are exploited and utilized to meet human needs or economic applications.

Economic Profit

The difference between the total revenue generated by a business and the total costs, both explicit and implicit, including opportunity costs.

Monopoly

A market structure characterized by a single seller who has exclusive control over a particular good or service, leading to limited consumer choice.