The CPA firm auditing Capri Corporation found that net income had been overstated.Which of the following could be the cause?
A)Failure to take advantage of purchase discounts by paying within the discount period.
B)Overstatement of inventory at year-end.
C)Use of the last-in,first-out (LIFO)method of valuing inventory in a period of rising prices.
D)Failure to record payment of an account payable to a supplier on the last day of the year.

Question

Quizplus · Accepted Answer

Overstating inventory at year-end would increase net income, as more inventory is being valued at a higher cost. This would cause a misstatement on the financial statements. The other choices - A, C, and D - would not directly impact the net income figure.

The CPA Firm Auditing Capri Corporation Found That Net Income