During 2009, P Company Discovered That the Ending Inventories Reported

question 70

Multiple Choice

During 2009, P Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2009 would be

• A)Correct
• B)$ 30,000 overstated.
• C)$150,000 overstated.
• D)$270,000 overstated.

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Definitions:

Buy Back

A corporate action in which a company purchases its own shares from the marketplace, reducing the number of outstanding shares.

Treasury Stock

Shares of a company's own stock that it has reacquired and holds in its treasury rather than retiring them.

Sale Price

The final amount at which a product or service is sold to consumers, after any discounts or adjustments.

Income Increase

A rise in the amount of money generated by an individual or organization, typically measured over a specific period of time.