If the inventory reported on the statement of financial position is understated, then net income reported on the income statement is understated.

Name: If the inventory reported on the statement of financial position is understated, then net income reported on the income statement is understated.
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Quizplus · Accepted Answer

If the inventory is understated, the cost of goods sold is overstated, which reduces gross profit and ultimately leads to an understatement of net income.

If the Inventory Reported on the Statement of Financial Position