If beginning inventory is understated by $10,000, the effect of this error in the current period is Cost of Goods Sold$\quad $ Profit A) Understated$\quad $$\quad $ Understated B) Overstated $\quad $$\quad $Overstated C) Understated $\quad $$\quad $Overstated D) Overstated $\quad $$\quad $Understated

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If beginning inventory is understated, the cost of goods sold will be understated because the cost of goods available for sale is lower. This results in an overstated profit since expenses (COGS) are understated.

If Beginning Inventory Is Understated by $10,000, the Effect of This