If ending inventory for the year ended December 31,2016,is overstated by $25,000:

Question

Quizplus · Accepted Answer

Overstating the ending inventory for the year ended December 31, 2016 will result in a higher cost of goods sold and therefore lower net income for that year. However, since the error was not corrected, the overstatement will carry over to the next year's beginning inventory, which means that the cost of goods sold for 2017 will be understated by $25,000, leading to an overstatement of net income by the same amount.

If Ending Inventory for the Year Ended December 31,2016,is Overstated