In a periodic inventory system, if the beginning inventory is overstated
A) net income is understated.
B) working capital is understated.
C) the current ratio is overstated.
D) cost of goods sold is understated.

Question

Quizplus · Accepted Answer

Overstating beginning inventory leads to overstating the cost of goods sold, which in turn reduces the gross profit and ultimately understates net income.

In a Periodic Inventory System, If the Beginning Inventory Is