In taking a physical inventory at the end of year 2017, Grant Company forgot to count certain units. Indicate how this error affects the following: (a) 2017 cost of goods sold. Overstates 2017 cost of goods sold. Understates 2017 cost of goods sold. None of the above. (b) 2017 gross profit. Understates 2017 gross profit. Overstates 2017 gross profit. None of the above. (c) 2017 net income. Understates 2017 net income. Overstates 2017 net income. None of the above. (d) 2018 net income. Understates 2018 net income. Overstates 2018 net income. None of the above.

Goals that are overly ambitious can discourage employees and decrease motivation, yet the idea of stretch goals is proposed as a way to get people fired up and motivated. as a manager, how might you decide where to draw the line between a “good” stretch goal and a “bad” one that is unrealistic?

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

Perez, inc., applies the equity method for its 25 percent investment in senior, inc. during 2018, perez sold goods with a 40 percent gross profit to senior, which sold all of these goods in 2018. how should perez report the effect of the intra-entity sale on its 2018 income statement?