onelife1

The formula used is this
Beg Inv + Purchases End Inv = Cogs
A)If Beg Inv is overstated by 1Unit, then COGs will also be oversted by 1 Unit. (Not the answer)
B)Using the above eqn we get purchases = 10,000
C) Beg Inv is understated by 2 units, then Cogs will be also undestated by 2 units.
Sales  cogs = Gross Profit Margin
if COgs is understated, then Gross profit margin will be overstated and that difference will even exist till Net income.
Hope this helps