Ricardo Clothing Uses a Periodic Inventory System and Committed an Error

question 1

Multiple Choice

Ricardo Clothing uses a periodic inventory system and committed an error that overstated inventory at the end of Year One. Assuming no further errors occur during the following year, at the end of Year Two:

• A) profit is understated; equity is overstated.
• B) profit is understated; equity is correct.
• C) profit is overstated; equity is correct.
• D) profit is overstated; equity is overstated.

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Definitions:

Language

A system of communication used by a particular community or country, consisting of written, spoken, or gestural symbols that are conventionally understood.

Noam Chomsky

An influential linguist, philosopher, cognitive scientist, historian, and social critic, known for his theory of generative grammar.

Dialect

A particular form of a language which is peculiar to a specific region or social group.

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A type of string or cord made from the fibers of the hemp plant, known for its durability and strength.