An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

Name: An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.
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Quizplus · Accepted Answer

This is because the overstatement of ending merchandise inventory means that the cost of goods sold is calculated using a lower value for the inventory, which in turn leads to a higher cost of goods sold.

An Overstatement of Ending Merchandise Inventory in the Current Period