If a Company Mistakenly Counts Less Items During a Physical

question 113

Multiple Choice

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?

• A) understated
• B) overstated
• C) no change
• D) only inventory will be affected

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Definitions:

Differentiated

Pertaining to products or services that are distinguished from similar products or services by unique characteristics, branding, quality, or performance.

Substitute Products

Goods or services that can be used in place of each other, demonstrating a positive cross-elasticity of demand.

Oligopolistic Firms

Companies that are part of an oligopoly, a market structure with a small number of large firms dominating the industry, often leading to strategic behavior.

High Profits

Increased financial gains resulting from operating activities, typically seen as significantly above the average or expected level.