If a company understates its count of ending inventory in year 1, which of the following is true? -costs of good sold is understated at the end of year 1.-profit is correct in year 2.-the balance of retained earnings is overstated at the end of year 1.-the balance of retained earnings is correct at the end of year 2.

Costs of good sold is understated at the end of Year 1

Explanation:

From the inventory formula:

An understatment means, something worth $10 is being valued at $8 so if the count is understate the Ending Inventory  in the books is lower that the real ending iventory

We could build the following formula

if ending is undestated we got that

Now because of this, COGS needs to make up for the lower ending inventory so it will be understated as well, by the same amount.

i know right it’s not fair some people are just so rude unlike you your actually trying to get to know people and i think that is very kind