Accounting for IGCSE & O level - Advanced Principles (Section 1 - No. 9)
What is the effect of an overstatement of closing inventory on the cost of goods sold and profit for the period?
Cost of goods sold overstated, profit overstated.
Cost of goods sold understated, profit understated.
Cost of goods sold understated, profit overstated.
Cost of goods sold overstated, profit understated.
Paskaidrojums
Overstating closing inventory results in an understated cost of goods sold and an overstated profit.