Ending Inventory for the Current Accounting Period Is Overstated by $2

question 17

Multiple Choice

Ending inventory for the current accounting period is overstated by $2 700.What effect will this error have on Cost of sales and Net profit?

• A) \[\begin{array} { | c | c | }
• \hline \text { Cost of sales } & \text { Net profit } \\
• \hline \text { Understated } & \text { Understated } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | c | }
• \hline \text { Cost of sales } & \text { Net profit } \\
• \hline \text { Overstated } & \text { Overstated } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | }
• \hline \text { Cost of sales } & \text { Net profit } \\
• \hline \text { Overstated } & \text { Understated } \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | c | }
• \hline \text { Cost of sales } & \text { Net profit } \\
• \hline \text { Understated } & \text { Overstated } \\
• \hline
• \end{array}\]

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