A $15,000 understatement of the current year's ending inventory was discovered after the financial statements for the year were prepared.How would that inventory error impact the current year's financial statements?
A)Current assets were overstated and net income was understated.
B)Current assets were overstated and net income was overstated.
C)Current assets were understated and net income was understated.
D)Current assets were understated and net income was overstated.

Question

Quizplus · Accepted Answer

If the inventory account is understated,then current assets will be understated and cost of goods sold will be overstated.This will cause net income to be understated.

A $15,000 Understatement of the Current Year's Ending Inventory Was