If a Company Overstates Its Ending Balance of Inventory in Year

question 90

Multiple Choice

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2,which one of the following is true?

• A)Net income is overstated in year 2.
• B)Cost of goods sold is overstated in year 1.
• C)Net income is understated in year 1.
• D)Retained earnings is overstated in year 1.

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Definitions:

Organizational Culture

is the collection of values, beliefs, and behaviors that shapes the social and psychological environment of a business organization.

Dimensions Vary

Dimensions vary indicates that characteristics or aspects of something can differ in magnitude or extent among different entities or within different contexts.

Labels Effective

The practice of using descriptive or informative tags or stickers in a way that significantly enhances the understanding or management of items or information.

Organizational Socialization

The process through which new employees learn the values, norms, and expectations of an organization to become effective members.