Overstating of sales in the income statement leads to:
A)decrease in inventory turnover ratio.
B)decrease in EPS.
C)increase in gross profit ratio.
D)decrease in accounts receivable ratio.

Name: Overstating of sales in the income statement leads to: A)decrease in inventory turnover ratio. B)decrease in EPS. C)increase in gross profit ratio. D)decrease in accounts receivable ratio.
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Question

Quizplus · Accepted Answer

Overstating sales increases revenue, which increases gross profit, thus increasing the gross profit ratio.

Overstating of Sales in the Income Statement Leads To