During the taking of a physical inventory on December 31, 2012, inventory was co

Question

During the taking of a physical inventory on December 31, 2012, inventory was counted as $100,870 instead of the correct amount of $100,780. The effect of the error on the December 31, 2012 balance sheet and income statement will be: (A)ending inventory will be understated; gross profit will be overstated. (B)ending inventory will be overstated; cost of merchandise sold will be overstated. (C)ending inventory will be overstated; net income will be overstated. (D)ending inventory will be understated; cost of merchandise sold will be overstated

Explanation / Answer

the answer is d. ending inventory will be understated; merchandise sold will be overstated

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