Determining the Financial Statement Effects of Inventory Errors Assume the 2011 ending inventory was understated by $100,000.

Question:

Determining the Financial Statement Effects of Inventory Errors
Assume the 2011 was understated by $100,000. Explain how this error would affect the 2011 and 2012 pretax income amounts. What would be the effects if the 2011 were overstated by $100,000 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 =...