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:

Payroll Register

A detailed document that records the earnings, deductions, and net pay for all employees for each pay period.

Gross Payroll

The total amount of money paid by an employer to its employees before deductions such as taxes, retirement contributions, and health insurance.

Federal Unemployment Tax Rate

A tax rate set by the federal government to fund unemployment compensation payments to workers who have lost their jobs.

Salaries Payable

Salaries payable is an account that records the amounts owed to employees for work performed but not yet paid.