If ending inventory for the period is overstated, then gross profit for that year will be overstated.

Question

Quizplus · Accepted Answer

When ending inventory for the period is overstated, it means that the value of inventory on hand is recorded at a higher value than its actual cost. This results in a higher cost of goods sold and a lower gross profit. However, if ending inventory is overstated, it would decrease the cost of goods sold and increase gross profit, leading to an overstatement of gross profit.

If Ending Inventory for the Period Is Overstated, Then Gross