When an Understatement Misstatement in Inventory Occurs

question 8

Multiple Choice

When an understatement misstatement in inventory occurs

• A)cost of goods sold is understated
• B)net income is overstated
• C)inventory is overstated
• D)cost of goods sold is overstated
• E)net income is understated
• F)both A and B
• G)both D and E

Understand the relationship between the nature of products (perishability, demand, cost) and credit period lengths.

Grasp the significance of changes in credit terms on a firm's Accounts Receivable Collection Period (ACP).

Recognize the impact of competition and product cost on the length of credit periods offered.

Understand the importance of cash discounts in the decision to offer credit.