Phipps Corporation Overstated Its Ending Inventory on December 31,Year 1

question 67

Multiple Choice

Phipps Corporation overstated its ending inventory on December 31,Year 1.Which of the following correctly identifies the effect of the error on Year 2 financial statements?

• A)Cost of goods sold is overstated.
• B)Gross margin overstated.
• C)Ending inventory is understated.
• D)Net income is overstated.

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