Is it correct to say that an 'overstatement of year-end inventory' implies 'overstatement of expenses for the year'?
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Implication of overstatement of inventory
Replies (1)
No.
Over valuation of closing inventory implies that over valuation of profit. i.e. over value to be shown under credit side of Profit and loss a/c.
over valuation of current year closing stock is next year opening stock. it will affect on next year profit also. when opening stock is over valued (under debit side of profit and loss a/c) next year profit will get down.
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