An overstatement of ending inventory in one period results in
A)no effect on profit of the next period.
B)an overstatement of profit of the next period.
C)an understatement of profit of the next period.
D)an overstatement of the ending inventory of the next period.

Question

Quizplus · Accepted Answer

An overstatement of ending inventory in one period results in an understatement of cost of goods sold, leading to an overstatement of profit in that period. In the next period, the beginning inventory is overstated, which increases the cost of goods sold and understates profit.

An Overstatement of Ending Inventory in One Period Results in