If a Company Understates Its Count of Ending Inventory in Year

question 98

Multiple Choice

If a company understates its count of ending inventory in Year 1,which of the following is true?

• A)Costs of goods sold is understated at the end of Year 1.
• B)Profit is correct in Year 2.
• C)The balance of retained earnings is overstated at the end of Year 1.
• D)The balance of retained earnings is correct at the end of Year 2.

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Definitions:

Assessments

The evaluation or estimation of the nature, ability, or quality of something.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, typically denoted as alpha.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution without violating any constraint.

Equal-variances T-test

A statistical test used to compare the means of two groups, assuming that both groups have the same variance.