Merchandise Inventory at the End of the Year Is Overstated

question 9

Multiple Choice

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

• A) owner's equity is overstated
• B) cost of merchandise sold is overstated
• C) gross profit is understated
• D) net income is understated

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Definitions:

ERP

Enterprise Resource Planning, an integrated management of main business processes, often in real-time and mediated by software and technology.

CRM

Customer Relationship Management (CRM) is a technology for managing all your company's relationships and interactions with current and potential customers, aiming to improve business relationships.

SCM

Supply Chain Management involves the systematic control over the transfer of resources, information, and finances as they make their way from their origin with suppliers to manufacturers, onto wholesalers and retailers, and finally to the end user or consumer.

TPS

The Transaction Processing System, a specific form of information system, is tasked with collecting, saving, adjusting, and fetching transactional information pertaining to an organization.