An overstatement of beginning inventory causes net income to be overstated.

Name: An overstatement of beginning inventory causes net income to be overstated.
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Question

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Beginning inventory is added in the equation to determine cost of goods sold,so if it is overstated,then cost of goods sold is overstated.If the cost of goods sold expense on the Income Statement is overstated,then net income will be understated.

An Overstatement of Beginning Inventory Causes Net Income to Be