If ending inventory is understated in the current fiscal year, what effect will this have on net income for the next fiscal year? a.Net income would only be affected in the current fiscal year, and it would be overstated. b.Net income would be overstated. c.Net income would be understated. d.There would be no effect on net income
If ending inventory is understated in the current fiscal year, what effect will this have on net income for the next fiscal year? a.Net income would only be affected in the current fiscal year, and it would be overstated. b.Net income would be overstated. c.Net income would be understated. d.There would be no effect on net income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1)
If ending inventory is understated in the current fiscal year, what effect will this have on net income for the next fiscal year?
a.Net income would only be affected in the current fiscal year, and it would be overstated.
b.Net income would be overstated.
c.Net income would be understated.
d.There would be no effect on net income.
2)
Cars, appliances, and fine jewelry would all typically use which of the following inventory methods?
a.Last-in, first-out
b.Specific identification
c.Weighted-average
d.First-in, first-out
3)
Under the periodic inventory system, which of the following accounts is debited when inventory is purchased?
a.Accounts Payable
b.Purchases
c.Merchandise Inventory
d.Accounts Receivable
4)
If ending inventory is overstated by $40,000, what effect will this have on cost of goods sold and net income?
a.Cost of goods sold is overstated by $40,000, and net income is understated by $40,000.
b.Cost of goods sold is understated by $40,000, and net income is overstated by $40,000.
c.Cost of goods sold is understated by $40,000, and net income is understated by $40,000.
d.Cost of goods sold is overstated by $40,000, and net income is overstated by $40,000.
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