Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 15 - No. 4)
What is the effect of closing inventory being lower than expected on a company's financial statements?
Increase cost of goods sold, increase net profit.
Decrease cost of goods sold, decrease net profit.
Increase cost of goods sold, decrease net profit.
Decrease cost of goods sold, increase net profit.
Explanation
Lower inventory means a higher cost of goods sold, resulting in lower net profit.
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