My text book is  Hospitality Industry Financial Accounting (4th edition). I am in chapter 10 -- INVENTORY now.  Problem 10 asks me to do two following works: Indicate the effects of the following errors on cost of goods sold and net income. 1. Beginning inventory is understated by $10,000. 2. Ending inventory is overstated by $25,000. 3. Beginning inventory is overstated by $30,000 and ending inventory is understated by $10,000. 4. Ending inventory is understated by $5,000 and beginning inventory is understated by $5,000

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.