The work-in-process beginning inventory was understated. This error will cause:

Question

Quizplus · Accepted Answer

If the work-in-process beginning inventory is understated, it means that the total costs assigned to production during the period will be understated, leading to an understatement of the cost of goods manufactured. This, in turn, can lead to an overstatement of net income, as lower costs of goods manufactured would result in higher gross margin and thus higher net income if all other factors remain constant.

The Work-In-Process Beginning Inventory Was Understated