An overstatement of ending inventory in one period results in
A) no effect on net income of the next period.
B) an overstatement of net income of the next period.
C) an understatement of net income of the next period.
D) an overstatement of the ending inventory of the next period.

Question

Quizplus · Accepted Answer

An overstatement of ending inventory in one period results in an overstatement of net income for that period, which leads to an understatement of net income in the next period because the beginning inventory for the next period will be overstated, increasing the cost of goods sold.

An Overstatement of Ending Inventory in One Period Results in