Miscount within a current period. Web if ending inventory is overstated, then cost of goods sold would be understated. Web in a periodic inventory system, if ending inventory is understated, cost of goods sold is understated. Understated in current period and overstated in next period. Web the effect of understated ending inventory. Web ending inventory equals the beginning inventory balance plus the cost of any inventory purchases minus the cost of any inventory sold and shrinkage. Web if you understated beginning inventory, your cost of goods sold will be understated by the error amount. Then, since cost of goods sold is understated, your. When the inventory asset is understated at the end of the year, then income for that year is also understated. Web when ending inventory is overstated it causes current assets, total assets, and retained earnings to also be overstated.
O the current ratio is overstated. Web if ending inventory at the end of the year is understated, what is the effect on cost of goods sold and net income? Web if a corporation overstates its inventory, it will affect the following reported amounts on the corporation's income statement: Understated in current period and overstated in next period. Web the effect of understated ending inventory. Then, since cost of goods sold is understated, your. Also, overstatement of ending inventory. O net income is understated. Web if ending inventory is overstated, then cost of goods sold would be understated. Web on the other hand, if the ending inventory balance is understated, then, as a result, the net income for the same period may also become understated. If the inventory has been overstated by $3,000, that is to say that the cogs was un has been overstated by $3,000 beacause if the cogs decreases it is to say that the if.
