Question 2

Determine the effect on cost of goods sold, total assets, and gross margin for 2015 and 2016 if the following inventory errors are not corrected. Indicate your answer with (+) for overstated, (-) for understated, and (0) for no effect.

Beginning inventory for 2015 is understated. Ending inventory for 2015 is understated.

	Cost of Goods Sold	Effect in 2015 on Total Assets	Gross Margin

	Cost of Goods Sold	Effect in 2016 on Total Assets	Gross Margin