Finished goods ending inventory was understated. This error will cause:

A) the cost of goods manufactured to be overstated.
B) the cost of goods sold to be overstated.
C) the net income to be overstated.
D) All of these are correct.

Question

Elisha Maknojia · Accepted Answer

Final Answer : B, Explanation :  When finished goods ending inventory is understated, it means that more costs are being allocated to the cost of goods sold than should be. This overstates the cost of goods sold, leading to an understatement of net income. It does not directly affect the cost of goods manufactured.

Finished goods ending inventory was understated. This error will cause:

A) the cost of goods manufactured to be overstated.
B) the cost of goods sold to be overstated.
C) the net income to be overstated.
D) All of these are correct.

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Learning Objectives

Learning Objectives

Related questions

Finished goods ending inventory was understated. This error will cause:A) the cost of goods manufactured to be overstated.B) the cost of goods sold to be overstated.C) the net income to be overstated.D) All of these are correct.

Definitions

Learning Objectives

Learning Objectives

Related questions

Finished goods ending inventory was understated. This error will cause:

A) the cost of goods manufactured to be overstated.
B) the cost of goods sold to be overstated.
C) the net income to be overstated.
D) All of these are correct.