If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?
A) Understated
B) Overstated
C) No change.
D) Only inventory is affected.

Question

Quizplus · Accepted Answer

If fewer items are counted, the ending inventory will be understated, leading to an overstatement of the cost of goods sold.

If a Company Mistakenly Counts Less Items During a Physical