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:

Causal Relationship

A connection between two variables where a change in one directly affects the change in the other.

Actor-Observer Effect

A psychological phenomenon in which people tend to attribute their own actions to situational factors while attributing other people's actions to their internal characteristics.

Fundamental Attribution Error

The tendency to explain someone's behavior based on internal factors, such as personality or disposition, while underestimating external factors.

Locus of Causality

The perceived source of control over events in an individual's life, internal or external to oneself.