The Understatement of the Ending Inventory Balance Causes

question 21

Multiple Choice

The understatement of the ending inventory balance causes:

• A) Cost of goods sold to be overstated and net income to be understated.
• B) Cost of goods sold to be overstated and net income to be overstated.
• C) Cost of goods sold to be understated and net income to be understated.
• D) Cost of goods sold to be understated and net income to be overstated.
• E) Cost of goods sold to be overstated and net income to be correct.

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Definitions:

Flight of Ideas

A thought disorder characterized by rapid shifts from one topic to another, often seen in manic states of bipolar disorder.

Loose Associations

A thought disorder characterized by a disorganized thinking process, evident when someone jumps from one idea to another with little logical connection.

Tangential

Diverging from the previous topic or path without reaching a definite goal or conclusion.

Poverty

A state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.