Opening inventory for the current year is overstated by 5,000 and closing inventory is overstated by 12,000. What is the combined effect on the current year’s net income?
Correct answer D. 7,000 (overstated)
Explanation
Overstated opening inventory raises cost of sales and understates profit by 5,000, while overstated closing inventory overstates profit by 12,000, giving a net overstatement of 7,000.
Answer checked How we write and check questions
Discussion