An increase in the ending inventory will cause the cost of food sold at the end of the year to appear lower that it really is.
The cost of goods ( example, food) is directly affected by the amount of inventory at the end of an account period.
If the ending Inventory increases and everything else remains the same, the cost of goods sold is calculated as follows;
cost of food sold = Benning inventory + purchases - ending inventory
From the equation above, an increase in the ending inventory will cause the cost of food sold at the end of the year to appear lower that it really is.
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