An understatement of the beginning inventory results in
A) no effect on the period's earnings.
B) an overstatement of earnings.
C) an understatement of earnings.
D) a need to adjust purchases.

Question

Quizplus · Accepted Answer

An understatement of the beginning inventory leads to a lower cost of goods sold (since beginning inventory is part of the cost of goods sold calculation), which in turn results in an overstatement of earnings for the period.

An Understatement of the Beginning Inventory Results in