In a Periodic Inventory System, If Ending Inventory Is Understated

question 153

Multiple Choice

In a periodic inventory system, if ending inventory is understated,

• A) net income is understated.
• B) working capital is overstated.
• C) the current ratio is overstated.
• D) cost of goods sold is understated.

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Definitions:

Shelf Space

The area allocated for products in retail outlets, which can influence sales volume due to visibility and accessibility to consumers.

Economic Espionage

The act of secretly gathering proprietary or economically valuable information about the competition for commercial advantage.

Unethical Behavior

Unethical behavior refers to actions that go against moral principles and standards, often causing harm or disadvantaging others in the social or professional realm.

Competition

The presence of multiple companies or entities in the same marketplace, vying for the same customers or market share.