Assume the 2014 ending inventory was understated by $50,000. Explain how this error would affect the 2014

Question:

Assume the 2014 was understated by $50,000. Explain how this error would affect the 2014 and 2015 pretax income amounts. What would be the effects if the 2014 were overstated by $50,000 instead of understated?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...