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ERROR ON INVENTORY COUNT AND ITS EFFECTS

COST OF GOODS SOLD

Cost of Cost of
Beginning Ending
Inventory + Goods - Inventory = Goods
Purchased Sold

INCOME STATEMENT

INVENTORY ERROR COST OF GOODS SOLD NET INCOME

Understated
UNDERSTATED OVERSTATED
beginning inventory
Overstated
OVERSTATED UNDERSTATED
beginning inventory
Understated
OVERSTATED UNDERSTATED
ending inventory
Overstated
UNDERSTATED OVERSTATED
ending inventory

FINANCIAL POSITION

ENDING
SHOCKHOLDER’S
INVENTORY ASSETS LIABILITIES
EQUITY
ERROR

OVERSTATED OVERSTATED NO EFFECT OVERSTATED

UNDERSTATED UNDERSTATED NO EFFECT UNDERSTATED

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