How does an error that results in an overstatement of ending inventory affect the elements of the company's financial statements in the current year?

A)Option A
B)Option B
C)Option C
D)Option D

Question

How does an error that results in an overstatement of ending inventory affect the elements of the company's financial statements in the current year?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

Overstating ending inventory will increase assets (inventory)and decreases expenses (cost of goods sold),which will increase net income and stockholders' equity.It will not affect the statement of cash flows.

How Does an Error That Results in an Overstatement of Ending