The ending merchandise inventory for the current year is ove

The ending merchandise inventory for the current year is overstated by $ 24 comma 000 $24,000. What effect will this error have on the following? year\'s net? income? A. The net income will be understated by $ 48 comma 000 $48,000. B. The net income will be overstated by $ 24 comma 000 $24,000. C. The net income will be understated by $ 24 comma 000 $24,000. D. The net income will be overstated by $ 48 comma 000 $48,000.

Solution

Answer is B

The net income will be overstated by $ 24 comma 000 $24,000.

Increase in inventory means that cost of goods sold is less, if it got less then the income will increase.