A $15,000 overstatement of the 20B ending inventory was discovered after the financial statements for 20B were prepared. What was the effect of the inventory error on the 20B financial statements?

Question

Quizplus · Accepted Answer

The ending inventory is part of current assets, so an overstatement leads to overstated current assets. It also reduces the cost of goods sold, thus overstating profit.

A $15,000 Overstatement of the 20B Ending Inventory Was Discovered