Suppose that Hastings Corporation overstates its ending inventory for 2015.What effect will this have on the reported amount of cost of goods sold for 2015?

Question

Quizplus · Accepted Answer

If inventory is overstated, it means that the cost of goods sold calculation will be understated since the cost of goods sold is calculated by subtracting the ending inventory from the total cost of goods available for sale. Therefore, the reported amount of cost of goods sold will be understated.

Suppose That Hastings Corporation Overstates Its Ending Inventory for 2015