What is the impact on the financial statements of an overstatement of ending inventory?

Question

Quizplus · Accepted Answer

An overstatement of ending inventory will result in an understatement of cost of goods sold, and therefore an overstatement of gross profit and net income for the current year. In future years, next year's ending inventory might be affected if the error isn't corrected, but the impact on current year's financial statements is immediate.

What Is the Impact on the Financial Statements of an Overstatement