Triangle Business Daily

What is the cumulative effect of the inventory error on total gross profit for the 2 years?

Gross profit in 2007 is $43,000 and in 2008 it is $63,000. After accounting for an inventory overstatement at the end of 2007, adjustments are made and gross profit is found to actually be $37,010 in 2007 and $68,990 in 2008. What is the cumulative effect of the inventory error on total gross profit for the 2 years?

Public Comments

1. Dennis - This depends on how the company is organized, and the accounting method you adhere to... These rules differ if you are a 503.c3 and run inventory and cost of goods on FIFO versus LiFo. I'd get a CPA involved to determine if you have to file a correction and/or restatement... As long as there was "no intent to deceive" - you should be fine. DCG