If an inventory account is understated at year end,the effect will be to overstate the
A) net purchases.
B) gross margin.
C) cost of goods available for sale.
D) cost of goods sold.

Question

Quizplus · Accepted Answer

If the inventory account is understated at year-end, it means that the cost of goods sold has been overstated since the cost of goods available for sale remains unchanged. As a result, the answer would be D since an understated inventory account will overstate the cost of goods sold.

If an Inventory Account Is Understated at Year End,the Effect