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Question(s) / Instruction(s):

When using the gross margin method, if the gross profit margin is reduced from 20% to 15%, what impact will this have on the financial statements?                                                            

A.            Ending inventory would be overstated.                                                

B.            Beginning inventory would be overstated.                                                          

C.            Net income would be overstated                                                            

D.            Ending inventory would be understated.

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