In 2019,ending Inventory Is Overstated

question 48

Multiple Choice

In 2019,ending inventory is overstated.What is the effect of the error on total stockholders' equity in 2019 and 2020?

• A)Total stockholders' equity is overstated in 2019 and 2020.
• B)Total stockholders' equity is understated in 2019 and 2020.
• C)Total stockholders' equity is overstated in 2019 and correctly stated at the end of 2020.
• D)Total stockholders' equity is overstated in 2019 and understated in 2020.

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Definitions:

Cash Disbursements

Financial payments made by a business, including expenses, creditor payments, and inventory purchases.

Seasonal Merchandise

Products that are particularly popular or in demand during specific seasons or periods of the year.

Maturity Hedging

A financial strategy used to manage the risk associated with the timing of cash flows, particularly the mismatch between asset maturities and liability maturities.

Short-Term Assets

Assets expected to be converted into cash or used up within one year or an operating cycle, whichever is longer.