Merchandise Inventory at the End of the Year Was Inadvertently

question 13

Multiple Choice

Merchandise inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and retained earnings?

• A) net income is overstated, assets are overstated, retained earnings is understated
• B) net income is overstated, assets are overstated, retained earnings is overstated
• C) net income is understated, assets are understated, retained earnings is understated
• D) net income is understated, assets are understated, retained earnings is overstated

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Definitions:

Pure Tone Hearing Test

An audiological exam used to measure hearing sensitivity at various frequencies, helping diagnose the degree and type of hearing loss.

Tuning Fork Test

A diagnostic test utilized in audiology to assess hearing loss using the vibrations from a tuning fork.

Frequency Test

A statistical method for examining how often various values appear in a dataset.

Ménière's Disease

A disorder of the inner ear causing vertigo, ringing in the ear (tinnitus), and hearing loss.