- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
Hi sir
I am doing a question from OT revision, There is a question : During a physical inventory count, one section of inventory is counted twice , what will be impact?
Correct answer is Inventory will be overstated and GP will be overstated as well,
There is an other option which says- Inventory is overstated and COGS is overstated ..
Why not the second option?
i don’t understand the impact on COGS and on GP.Sales – COGS = Profit
COGS = Opening inventory + Purchases – Closing inventory
If closing inventory is overstated (e.g. due to double counting), COGS is UNDERstated. That is why profit is overstated.
(Put some numbers in if you need convincing.)
Viewing 4 posts - 1 through 4 (of 4 total)
- The topic ‘Inventory count’ is closed to new replies.