If a company overstates its Inventory balance at the end of Year 1 due to an error,its Retained Earnings will also be overstated on the Year 1 balance sheet.

Name: If a company overstates its Inventory balance at the end of Year 1 due to an error,its Retained Earnings will also be overstated on the Year 1 balance sheet.
Brand: Quizplus
Rating: 4.9 (44 reviews)

Question

Quizplus · Accepted Answer

Overstating inventory will understate cost of goods sold,resulting in higher net income and higher retained earnings in the current year.

If a Company Overstates Its Inventory Balance at the End