Merchandise Inventory at the End of the Year Is Overstated

question 126

Multiple Choice

Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

• A) Owner's equity is overstated.
• B) Cost of merchandise sold is overstated.
• C) Gross profit is understated.
• D) Net income is understated.

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Definitions:

Popliteal Vein

A blood vessel situated at the back of the knee which transports blood from the lower leg to the femoral vein.

External Iliac Vein

A large vein that carries deoxygenated blood from the lower limbs to the common iliac vein.

Femoral Vein

A large vein in the thigh that carries deoxygenated blood from the lower limb back to the heart.

Hepatic Portal Vein

A large vein that carries nutrient-rich blood from the digestive organs to the liver for processing.