Overstating Beginning Inventory Will Understate Cost of Goods Sold and Net

question 188

True/False

Overstating beginning inventory will understate cost of goods sold and net income.

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Definitions:

Accounting Cycle

The process of recording, classifying, summarizing, and reporting a company's financial transactions through the accounting period.

Journalize

The process of recording transactions in a journal, marking the first step in the accounting cycle.

Post-Closing Trial Balance

Prepared as an additional step in the accounting cycle to check that debits equal credits and all temporary accounts have been closed (have zero balances).

Insurance Policy

A contract between an insurer and a policyholder that specifies the terms and conditions under which the insurer will compensate the policyholder for loss.