At an organization that uses a periodic inventory system, the accountant accidentally understated the organization's beginning inventory. How would the accountant's accident impact the income statement?
A.
Cost of goods sold will be understated and net income will be overstated.
B.
Cost of goods sold will be overstated and net income will be understated.
C.
Cost of goods sold will be understated and there will be no impact on net income.
D.
There will be no impact on cost of goods sold and net income will be overstated.
It's A. Per this article, an understatement of the Beginning Inventory will result in an understated COGS and overstated Net Income: https://opentextbc.ca/principlesofaccountingv1openstax/chapter/explain-and-demonstrate-the-impact-of-inventory-valuation-errors-on-the-income-statement-and-balance-sheet/#:~:text=Inventory%20errors%20at%20the%20beginning%20of%20a%20reporting,cost%20of%20goods%20sold%20and%20overstated%20net%20income.
Is it because the company is using periodic inventory so at the end of every year they value and verify so whatever error there was in the beginning inventory is already corrected in the ending inventory. Please advise.
A voting comment increases the vote count for the chosen answer by one.
Upvoting a comment with a selected answer will also increase the vote count towards that answer by one.
So if you see a comment that you already agree with, you can upvote it instead of posting a new comment.
Mike12345678
Highly Voted 4 years, 4 months ago95529e0
Most Recent 11 months, 1 week agoKonradK
1 year, 5 months agoanjie2021
4 years, 1 month agoyomang
4 years, 1 month agoyomang
4 years, 1 month agoLCK
4 years, 1 month agoAlexandra123456
4 years, 5 months ago