If beginning inventory is understated then the cost of goods sold will be understated if there are no other errors.

Question

Quizplus · Accepted Answer

If beginning inventory is understated, the cost of goods sold will also be understated because the cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory. If beginning inventory is understated, then the cost of goods sold will be understated by the same amount.

If Beginning Inventory Is Understated Then the Cost of Goods