CFA Practice Question

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CFA Practice Question

If there is an overstatement in inventory at year-end, net income will ______

A. not be affected.
B. be overstated.
C. be understated.
Correct Answer: B

An overstatement in ending inventory ---> understated COGS ---> overstated net income.

User Contributed Comments 2

User Comment
vatsal92 This is a very good question!
choas69 COGS = Beginning Balance + Purchase - Ending Inventory
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