If inventory at the end of the year is understated by $60,000, what will this error cause?
A) An understatement of cost of goods sold for the year by $60,000
B) An overstatement of gross profit for the year by $60,000
C) An overstatement of inventory for the year by $60,000
D) An understatement of net income for the year by $60,000

Question

Quizplus · Accepted Answer

A $60,000 understatement of inventory at the end of the year will cause the cost of goods sold to be overstated by $60,000, the gross profit for the year to be understated by $60,000, and net income for the year to be understated by $60,000.

If Inventory at the End of the Year Is Understated