The December 31, 2014, Ending Inventory Failed to Include $25,000

question 115

Multiple Choice

The December 31, 2014, ending inventory failed to include $25,000 of inventory that was received on December 27, 2014. The purchase on account was, however, properly recorded on the date of delivery. What effect will this error have on the December 31, 2014, assets, liabilities, and net income for the year then ended?

• A) I
• B) II
• C) III
• D) IV

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Definitions:

Specified Value

A particular or defined value, often set as a criterion or standard.

Null Hypothesis

A hypothesis in statistics that assumes there is no significant difference or effect and serves as the default assumption in a hypothesis test.

Significance Level

A threshold used in hypothesis testing to determine whether to reject the null hypothesis, typically expressed as a probability such as 0.05 or 5%.

Type II Error

The failure to reject a false null hypothesis, also referred to as a "false negative."