Which of the following is a rare situation that may arise in a privately owned company that wants to decrease the amount of income taxes paid to the government?
A) Understating purchases
B) Overstating net income
C) Understating inventory
D) Understating cost of goods sold

Question

Quizplus · Accepted Answer

Understating inventory can lead to a rare situation where a privately owned company might decrease the amount of income taxes paid to the government. This is because understating inventory can result in an overstatement of the cost of goods sold, which in turn reduces the net income reported, thereby potentially reducing the income taxes owed.

Which of the Following Is a Rare Situation That May