Which statement is correct about inventory errors?
A)Misstatements in inventory usually affect two reporting periods.
B)Misstatements in inventory usually affect only the current accounting period.
C)Misstatements in inventory usually affect only beginning inventory amounts.
D)Misstatements in inventory usually affect only ending inventory amounts.

Question

Quizplus · Accepted Answer

Misstatements in inventory typically affect two reporting periods because the ending inventory of one period becomes the beginning inventory of the next. Therefore, any error in the ending inventory of the current period will not only affect the cost of goods sold and net income of the current period but also the beginning inventory and, consequently, the financial results of the following period.

Which Statement Is Correct About Inventory Errors