Which Statement Is Correct About Inventory Errors

question 40

Multiple Choice

Which statement is correct about inventory errors?

• A)Misstatements in inventory usually affect two reporting periods.
• B)Misstatements in inventory usually affect only the current accounting period.
• C)Misstatements in inventory usually affect only beginning inventory amounts.
• D)Misstatements in inventory usually affect only ending inventory amounts.

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Definitions:

Fixed Assets

Fixed Assets are long-term tangible assets, such as buildings, machinery, and equipment, used in the operations of a business and not expected to be converted to cash within a year.

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or within the operating cycle of a business, whichever is longer.

Intangible Assets

Non-physical assets that have value, such as patents, trademarks, and copyrights, known for their long-term benefits to a company.

Gain on Sale

The profit recognized when an asset is sold for more than its carrying amount.