If cost of goods sold are overstated, then is net income overstated or understated?
If cost of goods sold are incorrectly stated at $100 versus correctly stated at $75, then net income would be understated. There is an inverse relationship between net income and cost of goods sold.
Back To All Questions
You might also be interested in...
-
If cost of goods sold are understated, then is net income overstated or understated?
If cost of goods sold are understated, then net income would be overstated (inverse relationship). As you can see, if cost of good sold should have been $100 instead of $75, then net income should be $75 and not $100 (assuming no impact to operating expense. Since there is an inverse relationship, that means net...
-
If ending inventory is overstated, would cost of goods sold be overstated or understated?
If ending inventory is overstated, then cost of goods sold would be understated. As you can see in the visual below, the incorrectly stated inventory balance is $25 higher than the correct ending inventory balance. Since we can assume that beginning inventory and purchases would be the same, the difference would impact cost of good...
-
If ending inventory is overstated, would net income be overstated or understated?
If ending inventory is overstated, then cost of goods sold would be understated. As you can see in the visual below, the incorrectly stated inventory balance is $25 higher than the correct ending inventory balance. Since we can assume that beginning inventory and purchases would be the same, the difference would impact cost of goods...
If cost of goods sold are understated, then is net income overstated or understated?
If cost of goods sold are understated, then net income would be overstated (inverse relationship). As you can see, if cost of good sold should have been $100 instead of $75, then net income should be $75 and not $100 (assuming no impact to operating expense. Since there is an inverse relationship, that means net...
If ending inventory is overstated, would cost of goods sold be overstated or understated?
If ending inventory is overstated, then cost of goods sold would be understated. As you can see in the visual below, the incorrectly stated inventory balance is $25 higher than the correct ending inventory balance. Since we can assume that beginning inventory and purchases would be the same, the difference would impact cost of good...
If ending inventory is overstated, would net income be overstated or understated?
If ending inventory is overstated, then cost of goods sold would be understated. As you can see in the visual below, the incorrectly stated inventory balance is $25 higher than the correct ending inventory balance. Since we can assume that beginning inventory and purchases would be the same, the difference would impact cost of goods...
