XYZ Company’s inventory is overstated at December 31 of this year. The result will be

Answer option D. Understated income next year

D.  Understated net income the following year. 

Invty, end yr1 overstated = invty, beg yr2 overstated

Overstated beginning inventory results to overstated cost of sales and understated net income. 

understated income next year.

Understated retained earnings this year.

ANSWER IS d 

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