Bill Inc.'s correct ending balance for the inventory account at the end of 2012 should be $5,000, but the company incorrectly stated it as $3,000. In 2013, Bill correctly recorded its ending balance of the inventory account. Which one of the following is true?
A) Gross profit is overstated by $2,000 in 2012.
B) Retained earnings are understated by $2,000 in 2013.
C) Gross profit is overstated by $2,000 in 2013.
D) Cost of goods sold is understated by $2,000 in 2012.
Correct Answer:
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