Saturday, October 10, 2020

Suppose a company overstates its ending inventory for 2021. What effect will this have on the reported amount of cost of goods sold for 2021?

Suppose a company overstates its ending inventory for 2021. What effect will this have on the reported amount of cost of goods sold for 2021?


A) Overstate cost of goods sold.

B) Understate cost of goods sold.

C) Have no effect on cost of goods sold.

D) Cannot be determined given the information provided.


Answer: B

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