If a Company Mistakenly Counts More Items During a Physical

question 136

Multiple Choice

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

• A) No change to net income.
• B) Net income will be overstated
• C) Net income will be understated.
• D) Only gross profit will be affected.

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Definitions:

Albumin

A protein commonly found in blood plasma that helps maintain blood volume and pressure by regulating osmotic forces.

Glomerular Capsule

The glomerular capsule is a cup-like sac at the beginning of the tubular component of a nephron in the kidney that performs the first step in the filtration of blood to form urine.

Nephron

The functional unit of the kidney, responsible for filtering blood and producing urine.

Microvilli

microscopic cellular membrane protrusions that increase the surface area for absorption, especially in the epithelial cells of the intestines.