Accounting for IGCSE & O level - Advanced Principles (Section 1 - No. 43)
If the closing inventory is overstated, the cost of goods sold is ______ and the gross profit is ______.
overstated, understated
understated, overstated
understated, understated
overstated, overstated
Explanation
If closing inventory is overstated, the cost of goods sold is understated and the gross profit is overstated.