An understatement of ending inventory will cause
A)An overstatement of assets and equity on the balance sheet.
B)An understatement of assets and equity on the balance sheet.
C)An overstatement of assets and an understatement of equity on the balance sheet.
D)An understatement of assets and an overstatement of equity on the balance sheet.
E)No effect on the balance sheet.

Question

Quizplus · Accepted Answer

An understatement of ending inventory results in lower reported assets and equity because inventory is part of current assets, and lower assets lead to lower equity.

An Understatement of Ending Inventory Will Cause