Hollander Company Hired Some Students to Help Count Inventory During

question 125

Multiple Choice

Hollander Company hired some students to help count inventory during their semester break. Unfortunately, the students added incorrectly and the 2016 ending inventory was overstated by $5,000. What would be the effect of this error in ending inventory?

• A)2016 net income would be overstated.
• B)2016 net income would be understated.
• C)2016 ending retained earnings would be understated.
• D)2016 cost of goods sold would be overstateD.The overstatement of the ending inventory causes cost of goods sold to be understated and net income to be overstated.

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Definitions:

Realistic

Pertaining to the tendency or practice of accepting situations as they are and being prepared to deal with them accordingly.

Sexual Harassment

Unwanted or inappropriate sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that creates a hostile work environment.

Policy Statement

A formal declaration of the principles and guidelines that govern the actions and decision-making processes within an organization.

Uniform Enforcement

The consistent application of laws, rules, or policies across all relevant situations or people without exceptions.