Unformatted text preview: financial statement users depend upon accurate statements, care must be taken to ensure that the inventory balance at the end of each accounting period is correct. The chart below identifies the effect that an incorrect inventory balance has on the income statement. Impact of Error on Error in Inventory Cost of Goods Sold Gross Profit Net Income Ending Inventory Understated Overstated Understated Understated Overstated Understated Overstated Overstated Beginning Inventory Understated Understated Overstated Overstated Overstated Overstated Understated Understated...
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- Fall '10
- Generally Accepted Accounting Principles, Goods Sold