Since an Error in the Period-End Inventory Causes an Offsetting

question 80

Multiple Choice

Since an error in the period-end inventory causes an offsetting error in the next period:

• A) Is immaterial for managerial decision making.
• B) It is said to be self-correcting.
• C) Managers can ignore the error.
• D) If affects only balance sheet accounts.
• E) It affects only income statement accounts.

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Definitions:

Avoid

To keep oneself from doing something, or to prevent a particular outcome from happening.

Transaction

An instance of buying or selling something; a business deal or action.

Utmost Good Faith

A legal doctrine requiring parties in certain types of contracts, such as insurance, to act honestly and disclose all relevant information.