An error that results in overstating ending inventory would have what effect on the company's financial statements in the current year?

Question

Quizplus · Accepted Answer

Overstating ending inventory will result in an understatement of the cost of goods sold and an overstatement of the gross profit for the current year. This in turn will overstate the net income, and therefore overstate the retained earnings and shareholder's equity on the balance sheet.

An Error That Results in Overstating Ending Inventory Would Have