If the ending inventory of a firm is overstated by $49,000, by how much and in what direction (overstated or understated) will the firm's operating income be misstated? (Hint: Use the cost of goods sold model, enter hypothetically "correct" data, and then reflect the effects of the ending inventory error and determine the effect on cost of goods sold.) operating income ? By ?

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A: Information Provided: Inventory = 20,000 COGS = 85,000 ICP (current) = 85.88 Benchmark ICP = 38

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A: Formula: Cost of goods sold = Beginning inventory + Purchases - Ending Inventory.

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Q: the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

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A:

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A: Given:

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A: Introduction: Overstated: The amounts shown higher than the actual values called as overstated. When…

Q: Given the following data for AI-Madar co. for 2021: Inventory at Cost (31/12/2021) Inventory at NRV…

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.