An Understatement of Year 1's Ending Inventory Will

question 92

Multiple Choice

An understatement of year 1's ending inventory will

• A)cause year 2's cost of goods sold to be overstated.
• B)result in an understatement of year 2's beginning inventory.
• C)not affect year 2's ending owner's equity.
• D)have no effect on year 2's gross margin.

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Definitions:

Substantially Impaired

A situation where the value, function, or utility of something has been significantly reduced or damaged.

Conform to the Contract

The requirement for the goods, services, or conditions provided or received to meet the specifications, quality, and terms outlined in a contractual agreement.

Commercial Unit

A term used in sales law referring to a standard or unit of goods that is regarded as a single whole for purposes of sale and division.

Accept Goods

The act of receiving or taking delivery of goods in a manner that conforms with the terms of a contract.