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The understatement of the ending inventory balance causes: Multiple Choice Cost of goods sold to be understated and net income to be overstated. Cost of goods sold to be overstated and net income to be correct. Cost of goods sold to be overstated and net income to be understated.

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Zviko

Answer:

Cost of goods sold to be overstated and net income to be understated.

Explanation:

Ending Inventory are deducted from the cost of sales figure to reach the gross profit amount in the trading account.

Understatement of Inventory means that Cost of goods sold will overstated and gross profit understated, consequently, net income will be also understated.

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