An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

Name: An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.
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Question

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An error that understates the ending inventory will cause the cost of goods sold to be overstated because the cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory.

An Error That Understates the Ending Inventory Will Cause the Cost