Prunedale Co

question 85

Multiple Choice

Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the following year. As a result, Prunedale's cost of goods sold for this year was:

• A)Overstated by $94,000.
• B)Overstated by $30,000.
• C)Understated by $94,000.
• D)Understated by $30,000.Overstatement of beginning inventory overstates cost of goods sold and the understatement of ending inventory overstates cost of goods sold: $32,000 + 62,000 = $94,000 overstatement of cost of goods sold

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Definitions:

Cooperative

A business or organization owned and operated for the mutual benefit of its members or shareholders.

Government Agency

An organization under the government that has specific functions in the administration and implementation of public policy.

Industry

Refers to a particular form or branch of economic or commercial activity, often associated with the production of goods or services.

Monopoly

A market structure characterized by a single seller who has exclusive control over a product or service, limiting competition.