If a Company Understates Its Ending Balance of Inventory in Year

question 104

Multiple Choice

If a company understates its ending balance of inventory in year 1 and it records inventory correctly in year 2,which one of the following is true?

• A)Net income is overstated in year 1.
• B)Cost of goods sold is understated in year 2.
• C)Net income is understated in year 2.
• D)Retained earnings is understated in year 2.

---

Definitions:

Over-The-Counter Medications

Medicines available without a prescription, used to treat common or minor ailments.

Electrical Discharges

The release of electricity accumulated in a body or an electrical device, which can occur naturally or in technological applications.

Patients Perceive

How patients understand or interpret their health, symptoms, or medical care, influenced by personal experiences and beliefs.

Chemical Properties

Characteristics of a substance that define its chemical reactivity and behavior under various conditions.