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Another way to view this is through the accounting equation, Assets = Liabilities + Owner's Equity. If you assign too little of the cost of goods available to Assets, then the amount of Owner's Equity will be too little—caused by net income being too little.
Inventory (Ending) and net income moves in the similar direction. If inventory (ending) understates, the net income will also understate. While Inventory (ending) and cost of goods sold have inverse relation.
For Sure Net Profit Also understated. so end of the year profit will go up with the amount which is understated.
If inventory at the end of year i.e. closing stock, is understated it will increase cost of sales thereby, understating the profit or overstating loss.