An inventory error carried forward into the next period causes misstatements in
A) Cost of goods sold
B) Gross profit
C) Net income
D) Gross profit and net income
E) All of the above

Question

Quizplus · Accepted Answer

An inventory error affects the cost of goods sold, which in turn affects gross profit. Gross profit is subtracted from the revenue to derive the net income. Therefore, all of the options mentioned above are affected by inventory errors.

An Inventory Error Carried Forward into the Next Period Causes