During the Taking of Its Physical Inventory on December 31

question 174

Multiple Choice

During the taking of its physical inventory on December 31, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be

• A) assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000
• B) assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement
• C) assets, retained earnings, and net income all overstated by $70,000
• D) assets and retained earnings overstated by $70,000 and net income understated by $70,000

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Definitions:

Marketing Mix

A foundational marketing model comprising four elements—product, price, place, and promotion—used by businesses to achieve their marketing objectives.

Target Markets

Specific groups of potential customers at whom a company aims its products and marketing efforts based on shared characteristics.

Competitors

Businesses or individuals in the same industry that vie for the same customer base or market share.

Exchange

The act of trading goods, services, or resources between parties, typically in a way that benefits both sides.