If a Company Overstates Its Ending Inventory Balance for 2012

question 217

Multiple Choice

If a company overstates its ending inventory balance for 2012 by $10,000,and understates its ending inventory balance for 2011 by $5,000 what are the effects on its net income for 2012 and 2011? Effect on 2012 Net Income Effect on 2011 Net Income

• A)Overstated by $15,000 Understated by $10,000
• B)Understated by $5,000 Overstated by $10,000
• C)Overstated by $15,000 Understated by $5,000
• D)Overstated by $10,000 Understated by$5,000

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Definitions:

Socially Constructed

An idea or notion that is created and developed by society rather than naturally existing.

Generalized Other

An abstract composite of social roles and social expectations.

Socialization

The process by which individuals learn and adopt the norms, values, and behaviors appropriate to their society or cultural group, essential for integration and functioning within their community.

Annette Lareau

A sociologist known for her work on social class influences on parenting styles and their impacts on children's lives.