Asked by Alison Piscitelli on May 23, 2024
Verified
An overstatement of ending inventory leads to an overstatement of cost of goods sold.
Ending Inventory
The total value of goods available for sale at the end of an accounting period.
Cost of Goods Sold
The direct costs attributable to the production of the goods sold by a company.
- Identify the consequences of inventory errors and the importance of accurate inventory accounting.
Verified Answer
BF
Brielle ForemanMay 26, 2024
Final Answer :
False
Explanation :
An overstatement of ending inventory would lead to an understatement of cost of goods sold. This is because the cost of goods sold is calculated by subtracting the ending inventory from the cost of goods available for sale. If the ending inventory is overstated, the cost of goods sold will be understated.
Learning Objectives
- Identify the consequences of inventory errors and the importance of accurate inventory accounting.