When ending inventory is understated:

A) cost of goods sold is overstated and profit is understated.
B) beginning inventory is overstated and profit is understated.
C) cost of goods sold is understated and profit is understated.
D) cost of goods sold is overstated and profit is overstated.

Ending Inventory

The total value of goods available for sale at the end of a specific accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Profit

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes associated with maintaining the business operations.