Happy House Corporation reported net income of $425,000 for the current year. After the financial statements had been prepared, it was discovered that ending inventory had been overstated by $25,000. The correct net income was:

Question

Quizplus · Accepted Answer

An overstatement of ending inventory results in an overstatement of net income. Therefore, the net income should be reduced by the amount of the overstatement ($25,000), resulting in a corrected net income of $400,000.

Happy House Corporation Reported Net Income of $425,000 for the Current