Company decides to expense manufacturing costs

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Reference no: EM131225093

A company decides to expense manufacturing costs when they finish manufacturing each product. Their auditor informs them that this approach does not adhere to generally accepted accounting principles. What impact does their approach have on the financial statements?

Cost of goods sold would be overstated for the period

Finished goods inventory could be overstated at period end.

Cost of goods sold would be understated for the period

Raw materials inventory could be overstated at period end.

Reference no: EM131225093

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