If beginning inventory is too big which of the following statements is true?
A)Cost of Good Sold is too big and income is too big.
B)Cost of Good Sold is too small and income is too big
C)Cost of Good Sold is too small and income is too small
D)Cost of Good Sold is too big and income is too small

Question

Quizplus · Accepted Answer

If beginning inventory is too big, it means that the amount of inventory that was carried over from the previous period is too high. This can lead to a higher cost of goods sold (COGS) because there is more inventory to be sold in the current period. Therefore, if COGS is too big, this means that the income will be lower because the cost of producing or acquiring the inventory is higher. Therefore, the correct answer is D – if beginning inventory is too big, cost of goods sold is too big, and income is too small.

If Beginning Inventory Is Too Big Which of the Following