The Understatement of the Beginning Inventory Balance Causes

question 67

Multiple Choice

The understatement of the beginning inventory balance causes:

• A) Cost of goods sold to be understated and net income to be understated.
• B) Cost of goods sold to be understated and net income to be overstated.
• C) Cost of goods sold to be overstated and net income to be overstated.
• D) Cost of goods sold to be overstated and net income to be understated.
• E) Cost of goods sold to be overstated and net income to be correct.

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Definitions:

Duty Of Care

A legal obligation imposed on an individual requiring adherence to a standard of reasonable care while performing any acts that could foreseeably harm others.

Breach

The violation of a legal obligation, rule, or agreement.

Legally Recognizable Injury

A harm or loss that the law considers sufficient to provide a basis for a lawsuit.

Negligence Action

A legal action taken for injuries or losses resulting from the failure of an individual to exercise reasonable care.