Zeus Company Understated Its Ending Inventory

question 84

Multiple Choice

Zeus Company understated its ending inventory. Which of the following answers correctly states the effect of the error in the present period?

• A)Overstatement of total assets and cost of goods sold.
• B)Understatement of total assets and gross margin.
• C)Understatement of liabilities and retained earnings.
• D)Overstatement of cost of goods sold and retained earnings.

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Definitions:

CISG

The United Nations Convention on Contracts for the International Sale of Goods, a treaty that governs the sale of goods between parties in different nations.

Passing of Title

Passing of title refers to the legal process in which ownership of property or goods is transferred from one party to another.

Article 2

in the context of the UCC, governs the sale of goods and provides guidelines for contracts involving the transfer of goods from sellers to buyers.

Chinese Law

The legal system that governs the People's Republic of China, characterized by a combination of statutory law and custom.