Merchandise Inventory at the End of the Year Was Understated

question 144

Multiple Choice

Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?

• A) net income is understated
• B) net income is overstated
• C) cost of merchandise sold is understated
• D) merchandise inventory reported on the balance sheet is overstated

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Definitions:

Intertidal Zone

The coastal area that is exposed to air at low tide and submerged at high tide, hosting a diverse array of adapted organisms.

Land Area

The total surface area of the Earth that is covered by land, excluding oceans and other bodies of water.

Runoff

Water from rainfall, snowmelt, or irrigation that flows over the ground surface and can carry pollutants into bodies of water, affecting water quality.

Sediments

Particles of rock, sand, or organic materials that are transported and deposited by wind, water, or ice, and that accumulate in layers on the Earth's surface.