If the Inventory at the End of the Current Year

question 78

Multiple Choice

If the inventory at the end of the current year is understated and the error is never caught,the effect is to:

• A)Understate income this year and overstate income next year.
• B)Overstate income this year and understate income next year.
• C)Understate income this year with no effect on income next year.
• D)Overstate the cost of goods sold,but have no effect on net income.

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Definitions:

Curiosity

A strong desire to know or learn something, driving individuals to explore and discover new information or experiences.

Habit

A settled or regular tendency or practice, especially one that is hard to give up.

Secondary Circular Reactions

A stage in Piaget's theory of cognitive development where infants repeat actions that are pleasurable or bring about a desirable outcome.

Primary Circular Reactions

Early repetitive behaviors in infants that focus on the body and are instrumental in the development of cognitive processes.