Hawk Store Counted Some of Its Inventory Twice

question 128

Multiple Choice

Hawk Store counted some of its inventory twice.As a result, its operating expenses will be

• A)Correct only if Hawk Store calculates it cost of goods sold correctly
• B)Correct since operating expenses are not affected by inventory costs
• C)Overstated
• D)Understated

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Definitions:

Leverage

The use of various financial instruments or borrowed capital, such as debt, to increase the potential return of an investment.

Stock Price

The cost of purchasing a single share of a company, which fluctuates based on market conditions and investor perceptions.

EBIT

Earnings Before Interest and Taxes represents a company's profit, encompassing all revenues and costs apart from interest and taxes.

EPS

Earnings per share. A firm’s earnings stated on a per-share outstanding basis. An important measure of business performance in the stock market.