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.

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