During the year 2011-2012, the value of closing inventory was overstated by 25,0

MCQ Practice

During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which of the following is true?

Subject: AccountingTopic: Accounting

The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013

The income was overstated during 2011-12 and closing inventory will be overstated during 2012-2013

The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013

The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013Accounting & Auditing

Correct Answer: C