The work-in-process beginning inventory was overstated.This error will cause:

Question

Quizplus · Accepted Answer

An overstated beginning inventory will cause the cost of goods sold to be overstated because the cost of goods available for sale is overstated. This will result in a lower gross profit and a lower net income. However, the cost of goods manufactured will not be affected as it is calculated using the cost of direct materials, direct labor, and manufacturing overhead used during the period, not the beginning inventory.

The Work-In-Process Beginning Inventory Was Overstated