Question

The beginning inventory of BG Action Figures is understated by $7 million at December 31, 20x8. What is the effect on 20x8 cost of goods sold? Group of answer choices $7 million overstated $7 million understated no effect none of the above

Answer 1

Answer:

$7million understated

Explanation:

Based on the information given the effect on 20x8 COST OF GOODS SOLD will be UNDERSTATED by $7 million reasons been that since the OPENING INVENTORY IS UNDERSTATED by $7 million which means that the COST OF GOODS SOLD will as well be UNDERSTATED by the same amount based on the fact that opening inventory adds to Cost of goods sold.