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Alexis Kovalyov
on Oct 28, 2024

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A $25,000 overstatement of the 2019 ending inventory was discovered after the financial statements for 2019 were prepared.Which of the following describes the effect of the inventory error on the 2019 financial statements?

A) Current assets were overstated and net income was understated.
B) Current assets were understated and net income was understated.
C) Current assets were overstated and net income was overstated.
D) Current assets were understated and net income was overstated.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, a key component in calculating cost of goods sold.

Overstatement

An error or inaccuracy in accounting records or financial statements where the value of assets, revenues, or profit is recorded higher than the actual amounts.

  • Understand the effects of inventory errors on financial statements.
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William FerriNov 03, 2024
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