An inventory count shows that the general ledger for inventory is understated by $5,000. The entry to correct this would include a debit to cost of goods sold.

Name: An inventory count shows that the general ledger for inventory is understated by $5,000. The entry to correct this would include a debit to cost of goods sold.
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Question

Quizplus · Accepted Answer

The correction for an understated inventory balance would be a debit to inventory and a credit to cost of goods sold, not the other way around.

An Inventory Count Shows That the General Ledger for Inventory