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:

Demand Instrument

A type of draft that allows the payee to demand payment at any time from a holder.

Overdue

Pertaining to something that has not been completed, paid, or returned by its expected or agreed-upon deadline.

Liability

The legal responsibility to settle a debt or compensate for harm caused to someone else, often resulting from actions or negligence.

Agent

An individual or entity authorized to act on behalf of another person or entity in legal or business transactions.