Question

In year 1 ending inventory is overstated by $2,000. explain the effect on cost of goods sold, gross profit and net income in year 1 and year 2 select all answers that apply.

Answer 1

Answer: cost of goods sold in the following year, year 2, will be overstated.

Gross profit in the current year, year1, will be overstated.

Cost of good sold in the current year, year 1, will be understated.

Gross profit in the next year, year 2, will be understated.

Step-by-step explanation: