If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

A) no change to net income
B) net income will be overstated
C) net income will be understated
D) only gross profit will be affected

Physical Inventory

A count of all the physical goods and materials in stock at a business, used to verify records and account balances.

Net Income

The remaining profit for a company after subtracting total expenses, taxes, and costs from its total income.

Items Count

A measure or total of individual things or components.