If a Company Mistakenly Counts More Items During a Physical

question 146

Multiple Choice

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

• A) no change to net income
• B) net income will be overstated
• C) net income will be understated
• D) only gross profit will be affected

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Definitions:

Marginal Cost

Represents the cost of producing one additional unit of a good or service, and varies depending on the level of production.

Health Care

Health care encompasses the services provided to maintain or improve individuals' health through prevention, diagnosis, and treatment of illness, injury, and other physical or mental impairments.

Private Health Insurance

Health insurance that is not offered by the government but by private entities, often offering more choice in healthcare providers.

Public Health Insurance

Insurance schemes funded or provided by the government to cover healthcare costs for its citizens.