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:

Purchase Decisions

Purchase Decisions involve the thought process and actions of consumers or businesses leading up to the buying of a product or service, influenced by various internal and external factors.

Decision-Making Process

The steps or stages involved in choosing among alternatives to solve a problem or achieve an outcome.

Post-Purchase Dissonance

The feeling of uncertainty or regret after making a significant purchase, often leading to a reassessment of the decision.

Buy Centers

Groups or committees within organizations responsible for making purchasing decisions, often consisting of members from various departments.