In 2019,beginning inventory is overstated.What is the effect of the error on total stockholders' equity in 2020?

Question

Quizplus · Accepted Answer

When beginning inventory is overstated in one year, the error self-corrects by the end of the next year because the overstatement will lead to an understatement of the current year's income, which then corrects the equity position by the end of the following year. Thus, total stockholders' equity is correctly stated in 2020.

In 2019,beginning Inventory Is Overstated