During the taking of its physical inventory, a company inadvertently counted its inventory as $89,000 instead of the correct amount of $87,000. Indicate the effect of the misstatement on the balance sheet of the current year.

Deviation would lead to excessive assets of $ 2,000 and also the excessive shareholders' equity for the same amount.

Explanation:

Given:

So there is a unbalance between Counted and Accurate inventory, because Accurate inventory is smaller than Counted inventory so it will create the overstatement with the amount:

= $89,000-  $87,000

= $2000.

So, COGS will be underestimated and this will result in excess of net income (and by extension, the equity).

Deviation would lead to excessive assets of $ 2,000 and also the excessive shareholders' equity for the same amount.

don't use it that much

d. the economy will face inflation.