If Stevens Co $\begin{array} { c c } \text { Effect on Cost of Goods Sold } & \text { Effect on Net Income } \\\end{array}$

question 48

Short Answer

If Stevens Co.overstates its ending inventory for the current year,what are the effects on cost of goods sold and net income for the current year?
$\begin{array} { c c } \text { Effect on Cost of Goods Sold } & \text { Effect on Net Income } \\\end{array}$
a. $\begin{array} { c c } &&&\text { Understated } &&&&& \text { Overstated } \\\end{array}$

b. $\begin{array} { c c } &&&\text { Overstated } &&&&&& \text { No effect } \\\end{array}$

c. $\begin{array} { c c } &&&\text { Understated } &&&&& \text { Understated } \\\end{array}$

d. $\begin{array} { c c } &&&\text { Overstated }&&&& & \text { Overstated }\end{array}$

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Definitions:

Scheduling Functions

Tasks involved in the planning and allocation of resources over time to perform a collection of tasks efficiently.

Safety Stock

Additional inventory kept to prevent stockouts caused by variations in supply or demand.

Purchased Component

A part or material acquired from an external supplier for use in the manufacturing or assembly process of a product.

Work-In-Process

Refers to partially finished goods that are in the process of being manufactured but are not yet complete.