An overstatement of the 2013 ending inventory results in an overstatement of stockholders' equity as of the end of 2013.

Question

Quizplus · Accepted Answer

Ending inventory is an important component of calculating cost of goods sold and net income, which ultimately affects retained earnings and stockholders' equity. Overstating ending inventory will result in an overstatement of net income, retained earnings, and ultimately, stockholders' equity.

An Overstatement of the 2013 Ending Inventory Results in an Overstatement