In 2019,ending inventory is overstated.What is the effect of the error on net income in 2019 and 2020?

Question

Quizplus · Accepted Answer

If ending inventory is overstated in 2019, it means that the cost of goods sold (COGS) in 2019 was understated. This, in turn, will lead to an overstatement of net income in 2019 because the company would have reported lower expenses (COGS) than it actually had. 
In 2020, when the overstated inventory is corrected, it would result in higher COGS and, as a result, a lower net income. Therefore, net income would be understated in 2020.

In 2019,ending Inventory Is Overstated