Merchandise inventory at the end of the year was inadvertently overstated. Which

Question

Merchandise inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity net income is overstated, assets are overstated, stockholders' equity is understated net income is overstated, assets arc overstated, stockholders' equity is overstated net income is understated, assets are understated, stockholders' equity is understated net income is understated, assets are understated, stockholders' equity is overstated

Explanation / Answer

option B.

As it is net income is overstated as ending inventory is increased by which cost of goods sold is reduced. It effect netincoem and also stock holder equity

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