Zinke Company Understated Its Ending Inventory at the End of Year

question 77

Multiple Choice

Zinke Company understated its ending inventory at the end of Year 1.Which of the following correctly states the effect of the error on the amounts shown on the Year 1 financial statements?

• A)Overstatement of total assets and cost of goods sold.
• B)Overstatement of cost of goods sold and retained earnings.
• C)Understatement of liabilities and retained earnings.
• D)Understatement of total assets and gross margin.

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Definitions:

Taking Perspective

The act of seeing things from someone else's viewpoint, fostering empathy and understanding in interpersonal relationships.

Conversations

The informal exchange of ideas, information, and feelings between two or more people, typically involving spoken language or gestures.

Modern Political State

An organized community living under a government, recognized from a legal standpoint with sovereignty and structure to regulate a defined territory and population.

Family-held Power

Refers to the influence and authority maintained by a family unit or lineage, often seen in business, politics, or social structures.