If the ending inventory of finished goods is understated,net income will be overstated.

Name: If the ending inventory of finished goods is understated,net income will be overstated.
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If the ending inventory of finished goods is understated, it means that the cost of goods sold will be overstated since fewer units were accounted for in the inventory count. This will result in a lower net income, not an overstated one.

If the Ending Inventory of Finished Goods Is Understated,net Income