If a Company Understates Its Count of Ending Inventory in Year

question 9

Multiple Choice

If a company understates its count of ending inventory in Year 1,which of the following is true?

• A)Costs of good sold is understated at the end of Year 1.
• B)Profit is correct in Year 2.
• C)The balance of retained earnings is overstated at the end of Year 1.
• D)The balance of retained earnings is correct at the end of Year 2.