There Is an Error in Computing Ending Inventory in Year

question 75

Multiple Choice

There is an error in computing ending inventory in Year 1.Which statement is TRUE?

• A)The error will have no effect on Year 2 financial statements.
• B)After three years,the inventory error will counterbalance.
• C)Gross profit will continue to be incorrect until an adjusting entry is made.
• D)The total gross profit for Year 1 and Year 2 combined will be correct.

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Definitions:

Digestive System

The series of organs and glands responsible for the breakdown and absorption of food to extract necessary nutrients.

Respiratory System

The network of organs and tissues that help you breathe, including the lungs, trachea, and nasal passages.

Lymph

Fluid in the lymph vascular system.

Elephantiasis

A tropical disease caused by parasitic worms, leading to severe swelling in the limbs and genitals.