Answer:
B) Correct Correct
Explanation:
The correct correct option chosen reflects or agrees with the fact that the beginning inventory is overstated by $7,000 becasuse the ending inventory of the previousperiod was overstated by $7,000.
Based on the periodic inventory system, the inventory at the end of every accounting period is determined through the process of physically counting the inventory at the end of that period.
As such once, the inventory determined for a previous period is overstated, ti automatically becomes the opening or beginning inventory for a new period. Overstated Ending becomes overstated beginning inventory.
