An Error in the Period-End Inventory Causes an Offsetting Error

question 31

Multiple Choice

An error in the period-end inventory causes an offsetting error in the next period and therefore:

• A) Managers can ignore the error.
• B) It is sometimes said to be self-correcting.
• C) It affects only income statement accounts.
• D) If affects only balance sheet accounts.
• E) Is immaterial for managerial decision making.

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Definitions:

Stop Payment Order

A request made to a bank by an account holder not to pay or cancel payment on a check or pre-authorized electronic payment that has not yet been processed.

Payee Name

Payee Name is the name of the individual or entity entitled to receive payment on a financial document, such as a check or transfer.

Check Amount

The check amount is the sum of money written on a check that the drawer directs the bank to pay the payee.

Postdated Check

A postdated check is a check written with a future date, indicating when it can be deposited or cashed.