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    yoburns's Avatar
    yoburns Posts: 1, Reputation: 1
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    #1

    Dec 6, 2008, 07:07 PM
    Incorrect inventory and Net Income
    I have found 2 affects that incorrect inventory would have on net income. If beginning inventory is understated then the net income will be overstated and if the beginning inventory is overstated the net income will be understated. Are there other reasons that net income would be affected by incorrect valuation of inventory?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Dec 10, 2008, 07:13 PM

    Ending Inventory misstated
    Freight-in charges misstated
    Purchases misstated

    These will affect COGS, Net Income, and Retained Earnings.
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