If a Company Misclassifies a General,selling and Administrative Cost as a Product

question 89

Multiple Choice

If a company misclassifies a general,selling and administrative cost as a product cost in a period when production exceeds sales:

• A) net income will be overstated.
• B) total assets will be understated.
• C) gross margin will be understated.
• D) Both net income will be overstated and gross margin will be understated.

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Definitions:

Clitoris

A sensitive organ located in the female genitalia, involved in sexual pleasure.

Mammary Glands

The glands in female mammals that produce milk to feed young offspring.

Hormone

A chemical substance produced in the body that controls and regulates the activity of certain cells or organs.

Inner Cell Mass

A group of cells in a blastocyte that gives rise to an embryo.