The ending inventory for the current year is overstated by $20,000.What effect will this error have on the following year's Net profit?

Question

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Since ending inventory is a part of COGS (Cost of Goods Sold), an overstated ending inventory means that the COGS for the current year is understated. Therefore, the Net profit for the current year is overstated by the same amount ($20,000). When this error is corrected in the following year, the Net profit for the following year will be understated by the same amount ($20,000).

The Ending Inventory for the Current Year Is Overstated by $20,000.What