The Accountant for Hobson Electrical Repair Failed to Make an Adjusting

question 124

Multiple Choice

The accountant for Hobson Electrical Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following statements is true?

• A)The total revenue will be overstated.
• B)The total revenue will be understated.
• C)The total expenses will be overstated.
• D)The total expenses will be understated.

Analyze how changes in inventory levels affect cost of goods sold and net income.

Evaluate the tax implications of inventory costing methods.

Understand the impact of inventory errors on financial statements.

Grasp the principles behind the consistency, comparability, and disclosure requirements in inventory accounting.

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Definitions:

Supernormal Rate

Typically refers to an above-average rate of return on investment or growth.

Normal Rate

A standard or typical rate often used in finance or economics, which can refer to interest rates, growth rates, or other measures.

Implied Constant Growth

A growth rate inferred from the dividend discount model, assuming dividends grow at a constant rate indefinitely.

Market Return

The total return on an investment over a specified period, including dividends, interest, and capital gains, as measured by the change in the market price.