If a Company Overstates Its Ending Balance of Inventory in Year

question 90

Multiple Choice

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2,which one of the following is true?

• A)Net income is overstated in year 2.
• B)Cost of goods sold is overstated in year 1.
• C)Net income is understated in year 1.
• D)Retained earnings is overstated in year 1.

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Definitions:

Land Use

The management and modification of natural environment or wilderness into built environment such as settlements and semi-natural habitats such as arable fields, pastures, and managed woods.

Materialism

A philosophical stance asserting that physical matter is the only or most fundamental reality and that all being and processes can be explained as manifestations or results of matter.

Alexis de Tocqueville

A French political thinker and historian best known for his works "Democracy in America," exploring American political and social structures.

American Life

A reference to the lifestyle and cultural norms experienced by individuals living in the United States, which can vary widely across different regions and time periods.