The inventory at the end of the year was understated by $14,750. (a) Did the error cause

Question:

The inventory at the end of the year was understated by $14,750.

(a) Did the error cause an overstatement or an understatement of the gross profit for the year?

(b) Which items on the balance sheet at the end of the year were overstated or understated as a result of the error?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...