An understatement of the ending inventory balance will cause:
A)Cost of goods sold to be overstated and net income to be understated.
B)Cost of goods sold to be overstated and net income to be overstated.
C)Cost of goods sold to be understated and net income to be overstated.
D)Cost of goods sold to be overstated and net income to be correct.

Question

Quizplus · Accepted Answer

If ending inventory is understated,then cost of goods sold is overstated which results in net income being understated.

An Understatement of the Ending Inventory Balance Will Cause