Match each situation to its impact (a-c) on the current year's net income.
-Merchandise held on consignment was included in the count of ending inventory.
A)Net income for the current year will be overstated.
B)Net income for the current year will be understated.
C)There will be no error effect on net income.

Question

Quizplus · Accepted Answer

When merchandise held on consignment is included in the count of ending inventory, it will result in an overstatement of the ending inventory and therefore an overstatement of the cost of goods sold, leading to an overstatement of the net income for the current year.

Match Each Situation to Its Impact (A-C) on the Current