Which of the following will result if the current year's ending inventory amount is understated in the cost of goods sold calculation?

Question

Quizplus · Accepted Answer

If the ending inventory amount is understated in the cost of goods sold calculation, then the cost of goods sold will be overstated. This is because the cost of goods sold is calculated as beginning inventory plus purchases, minus ending inventory. If ending inventory is understated, then the cost of goods sold will be higher than it should be, resulting in an overstatement of the cost of goods sold. This will in turn result in an understatement of net income. Total assets will not be directly affected by this error.

Which of the Following Will Result If the Current Year's