The Ending Merchandise Inventory for the Current Accounting Period Is

question 161

Multiple Choice

The ending Merchandise Inventory for the current accounting period is understated by $2,700.What effect will this error have on Cost of Goods Sold and Net Income for the current accounting period?

• A) \[\begin{array} { | l | l | }
• \hline \text { Cost of Goods Sold } & \text { Net Income } \\
• \hline \text { Understated } & \text { Understated } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Cost of Goods Sold } & \text { Net Income } \\
• \hline \text { Overstated } & \text { Overstated } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Cost of Goods Sold } & \text { Net Income } \\
• \hline \text { Understated } & \text { Overstated } \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Cost of Goods Sold } & \text { Net Income } \\
• \hline \text { Overstated } & \text { Understated } \\
• \hline
• \end{array}\]

---

Definitions:

Maker

In finance, often refers to the original issuer of a promissory note or check responsible for payment.