Which of the Following Statements Is True If a Company

question 32

Multiple Choice

Which of the following statements is true if a company overstates the ending balance of inventory?

• A)Cost of Goods Sold and profits will be overstated and Gross Margin will be understated.
• B)Cost of Goods Sold,Gross Margin,and profits will be understated.
• C)Cost of Goods Sold,Gross Margin,and profits will be overstated.
• D)Cost of Goods Sold will be understated,Gross Margin and profits will be overstated.

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Definitions:

Repossession

The process by which a creditor takes back property from the borrower, due to failure to make required payments.

Security Interest

A legal claim or right granted in an asset as collateral to ensure the fulfilment of an obligation, typically repayment of a loan.

Legal Remedy

The means through which a court of law enforces a right, imposes a penalty, or makes another court order to impose its will.

Purchase-Money Security Interest

A legal claim that allows a creditor priority in reclamation over the bought property if the debtor defaults on a loan used to purchase the property.