Ending Inventory for the Current Accounting Period Is Overstated by $2,700.What

question 192

Multiple Choice

Ending inventory for the current accounting period is overstated by $2,700.What effect will this error have on Cost of Goods Sold and Net Income for the current accounting period?

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

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Definitions:

Assets

Resources owned by a business or individual that have economic value.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards in the United States.

IASB

The International Accounting Standards Board, an organization that establishes accounting standards known as International Financial Reporting Standards (IFRS) that guide the preparation and reporting of financial statements globally.

Financial Information

Data about a company's past, present, and future financial health and performance.