If ending inventory in Year 1 is misstated,then Year 1's ________ also must be misstated.
A)purchases
B)cost of goods sold
C)goods available for sale
D)beginning inventory

Question

Quizplus · Accepted Answer

In terms of the balance sheet,an overstatement in ending inventory at the end of Year 1 overstates current assets,total asset,and total stockholders' equity at the end of Year 1.In terms of the income statement,if ending inventory was overstated in Year 1,Cost of Goods Sold was understated and Gross Profit and Income before Income Tax Expense would be overstated in Year 1.(Net Income would be overstated as well,although the effects would be offset somewhat by overstated Income Tax Expense. )

If Ending Inventory in Year 1 Is Misstated,then Year 1's