If ending inventory is overstated this period,beginning inventory will be overstated in the next period.

Question

Quizplus · Accepted Answer

Overstating ending inventory means that too much inventory was counted, which means the actual ending inventory is lower. This also means that the inventory that rolls over to the next period (beginning inventory) will be overstated because it includes some of the overstated ending inventory.

If Ending Inventory Is Overstated This Period,beginning Inventory Will Be