Suppose that Hastings Corporation overstates its ending inventory for 2012.What effect will this have on the reported amount of cost of goods sold for 2012?

Question

Quizplus · Accepted Answer

Overstating ending inventory will result in a lower cost of goods sold because the cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory. An overstated ending inventory reduces the cost of goods sold.

Suppose That Hastings Corporation Overstates Its Ending Inventory for 2012