A company's correct ending balance for the inventory account at the end of 2021 should be $5,000, but the company incorrectly stated it as $3,000. In 2022, the company correctly recorded its ending balance of the inventory account. Which one of the following is true? O Cost of goods sold is understated by $2.000 in 2021. O Retained earnings are overstated by $2,000 in 2022. O Gross profit is overstated by $2.000 in 2021. O Gross profit is overstated by $2,000 in 2022. O More than one of the answers above are correct

A company's correct ending balance for the inventory account at the end of 2021 should be $5,000, but the company incorrectly stated it as $3,000. In 2022, the company correctly recorded its ending balance of the inventory account. Which one of the following is true? O Cost of goods sold is understated by $2.000 in 2021. O Retained earnings are overstated by $2,000 in 2022. O Gross profit is overstated by $2.000 in 2021. O Gross profit is overstated by $2,000 in 2022. O More than one of the answers above are correct

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A company's correct ending balance for the inventory account at the end of 2021 should be $5,000,
but the company incorrectly stated it as $3,000. In 2022, the company correctly recorded its ending
balance of the inventory account. Which one of the following is true?
O Cost of goods sold is understated by $2.000 in 2021.
O Retained earnings are overstated by $2,000 in 2022.
O Gross profit is overstated by $2.000 in 2021.
O Gross profit is overstated by $2,000 in 2022.
O More than one of the answers above are correct

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