If the beginning inventory for 2015 is overstated, the effects of this error on cost of goods sold for 2015, net income for 2015, and assets at December 31, 2016, respectively, are
A)overstatement, understatement, overstatement.
B)overstatement, understatement, no effect.
C)understatement, overstatement, overstatement.
D)understatement, overstatement, no effect.

Question

Quizplus · Accepted Answer

An overstated beginning inventory increases the cost of goods sold, reducing net income for 2015. By the end of 2016, the error has no effect on assets.

If the Beginning Inventory for 2015 Is Overstated, the Effects