Overstating of sales in the income statement leads to a:
A) decrease in inventory turnover ratio.
B) decrease in EPS.
C) increase in gross profit ratio.
D) decrease in accounts receivable ratio.

Question

Quizplus · Accepted Answer

Overstating sales increases the gross profit since gross profit is calculated as sales minus cost of goods sold. This does not directly affect inventory turnover, EPS, or accounts receivable ratio in the manner described by the other options.

Overstating of Sales in the Income Statement Leads to A