If Ending Inventory for the Year Ended December 31,2019,is Understated,this

question 131

Multiple Choice

If ending inventory for the year ended December 31,2019,is understated,this error will cause owners' equity to be:

• A)overstated at the end of 2019 and understated at the end of 2020.
• B)understated at the end of 2019 and overstated at the end of 2020.
• C)overstated at the end of 2019 and correctly stated at the end of 2020.
• D)understated at the end of 2019 and correctly stated at the end of 2020.

Recognize the importance of consistency and accuracy in financial record-keeping.

Understand the role and ordering of various types of accounts in the general ledger.

Grasp the purpose and process of posting transactions from the journal to the ledger.

Learn the guidelines for choosing account names for the chart of accounts.

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Definitions:

Subordinated Debt

A type of borrowing that is ranked below other debts in terms of claims on assets or earnings.

Senior Debt

Debt that takes precedence over other unsecured or junior debt owed by the issuer in terms of the order of payment in the event of a liquidation.

Junk Bond

A high-yield but high-risk bond issued by companies or municipalities considered to be at greater risk of default than more secure investment-grade bonds.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.