What Effect (If Any)would the Unrealized Profits in Ending Inventory

question 15

Multiple Choice

What effect (if any) would the unrealized profits in ending inventory have on income tax expense for 2009?

• A)They would cause a $1,600 reduction in income tax expense.
• B)They would cause a $1,200 reduction in income tax expense.
• C)They would cause a $1,600 increase in income tax expense.
• D)They would cause a $1,200 increase in income tax expense.

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Definitions:

Parallelogram Steering

A steering linkage design in many vehicles where the linkage forms a parallelogram, allowing the wheels to move parallel to each other during turns.

Linkage Components

Various mechanical parts that connect together to transmit motion in order to perform a specific task.

Tie-rods

Components in a vehicle's steering system that help transfer the movement from the steering rack or center link to the steering knuckle, thus making the wheels turn.

Power Steering Hoses

High-pressure hoses that convey hydraulic fluid between the power steering pump and the steering gear to assist in vehicle steering.