a.If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in understating the firm's ending inventory balance by $12,000, how would the firm's cost of goods sold be affected?
b.If management wanted to overstate net income, would ending inventory be understated or overstated? Explain your answer.

Question

Quizplus · Accepted Answer

The Answer of a.If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in understating the firm's ending inventory balance by $12,000, how would the firm's cost of goods sold be affected?
b.If management wanted to overstate net income, would ending inventory be understated or overstated? Explain your answer.

AIf the Beginning Balance of the Inventory Account and the Cost