The Ending Merchandise Inventory for the Current Accounting Period Is

question 49

Multiple Choice

The ending merchandise inventory for the current accounting period is overstated by $3,500. What will be the effect of this error?

• A)Net income for the current accounting period will be overstated by $3,500.
• B)Cost of goods sold for the current accounting period will be overstated by $3,500.
• C)Ending merchandise inventory for the next accounting period will be overstated by $3,500.
• D)Cost of goods sold for the next accounting period will be understated by $3,500.

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Definitions:

Prime Costs

The sum of expenses for the raw materials and labor directly involved in the manufacturing of a product.

Conversion Costs

The aggregate expenditure on direct labor and manufacturing overheads used for turning raw materials into final products.

Frosting

In a culinary context, a sweet and fluffy coating or filling, usually made from sugar, butter, and flavorings, used to decorate or fill cakes and pastries. If referring to a financial term, there is no widely recognized definition fitting "frosting."

Prime Costs

The direct costs directly attributable to the production of goods, including direct materials and direct labor.