1. If beginning inventory is understated, then:

a. goods available for sale will be overstated.

b. gross profit will be overstated.

c. net income will be understated.

d. net income will be correct because the error will have been reversed.

2. An error in recording transactions that causes the trial balance to be out of balance is:

A. Recording a transaction twice.

B. Recording an amount in the wrong account.

C. Omitting the recording of a transaction.

D. Entering a credit as a debit.

E. None of these.

3. If current assets total $2,750 and working capital totals $2,200, the current ratio is:

A. 10.00 to 1

B . 5.00 to 1

C .8 to 1

D .20 to 1.