(CMA adapted, Jun 96 #3) An item of inventory purchased in Year 5 for $25.00 has been incorrectly written down to a current replacement cost of $17.50.The item is currently selling in Year 6 for $50.00, its normal selling price.Which one of the following statements is correct?
A)The income for Year 5 is overstated.
B)The cost of sales for Year 6 will be overstated.
C)The income for Year 6 will be overstated.
D)The closing inventory of Year 5 is overstated.
E)none of the above

Question

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The Answer of (CMA adapted, Jun 96 #3) An item of inventory purchased in Year 5 for $25.00 has been incorrectly written down to a current replacement cost of $17.50.The item is currently selling in Year 6 for $50.00, its normal selling price.Which one of the following statements is correct?
A)The income for Year 5 is overstated.
B)The cost of sales for Year 6 will be overstated.
C)The income for Year 6 will be overstated.
D)The closing inventory of Year 5 is overstated.
E)none of the above

(CMA Adapted, Jun 96 #3) an Item of Inventory Purchased