Asked by ashanti morris on Jun 02, 2024
Verified
Overstating ending inventory will overstate all of the following except
A) assets.
B) cost of goods sold.
C) net income.
D) owner's equity.
Ending Inventory
The total value of all merchandise or products that remain unsold at the end of an accounting period.
Overstating
The act of reporting financial statements or values higher than they actually are, leading to a misrepresentation of a company's financial condition.
- Determine the effects of inventory errors on financial statements.
Verified Answer
TR
Tristan RaborgJun 09, 2024
Final Answer :
B
Explanation :
Overstating ending inventory will decrease cost of goods sold, which in turn will increase gross profit and net income. It will also increase assets and owner's equity due to the higher valuation of inventory on the balance sheet.
Learning Objectives
- Determine the effects of inventory errors on financial statements.
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