If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

A) understated
B) overstated
C) no change
D) only inventory will be affected

Question

murali kumar · Accepted Answer

Final Answer : B, Explanation :  When a company counts fewer items than actually exist, it reports lower inventory levels. This error leads to a higher cost of goods sold (COGS) because the ending inventory is an essential part of the COGS calculation. Lower ending inventory means higher COGS.

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

A) understated
B) overstated
C) no change
D) only inventory will be affected

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Learning Objectives

Learning Objectives

Related questions

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?A) understatedB) overstatedC) no changeD) only inventory will be affected

Definitions

Learning Objectives

Learning Objectives

Related questions

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

A) understated
B) overstated
C) no change
D) only inventory will be affected