Last Year's Ending Inventory Was Overstated

question 105

Multiple Choice

Last year's ending inventory was overstated.This error would cause:

• A)this period's net income to be overstated.
• B)this period's net income to be understated.
• C)this period's end assets to be overstated.
• D)None of these are correct.

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Definitions:

Productivity

A measure of efficiency, typically defined as the output of goods or services produced per unit of input, such as labor or capital.

Salvage Value

The forecasted remaining worth of an asset after its period of functionality has ended.

Replacement Parts

Components that are designed to replace original parts of a machine or system that have worn out or failed.

Commercial Substance

An occurrence in a transaction where the future cash flows or the economic circumstances of the involved parties change as a result.