The Ending Merchandise Inventory for the Current Accounting Period Is

question 153

Multiple Choice

The ending merchandise inventory for the current accounting period is overstated by $3,500.What will be the effect of this error?

• A) The net income for the current accounting period will be overstated by $3,500.
• B) The cost of goods sold for the current accounting period will be overstated by $3,500.
• C) The ending merchandise inventory for the next accounting period will be overstated by $3,500.
• D) The cost of goods sold for the next accounting period will be understated by $3,500.

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Definitions:

Stock Index

An indicator used to measure and report value changes in a selection of stocks, which represents a specific segment of the stock market.

Risk-Free Rate

The expected yield from an investment that carries no risk, commonly exemplified by state bonds.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or additional shares.

Cash Settlement

The provision of some futures contracts that requires not delivery of the underlying assets but settlement according to the cash value of the asset.