Concept – Understated, Overstated, or No Effect

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For each of these 2021 inventory errors occurring, state the effect of the error on cost of goods sold, net income, and retained earnings using the following notation: understated (U), overstated (O), or no effect (NE). Also, use the following assumptions: the error is not discovered until 2022 and that a periodic inventory system is used. Income taxes can be ignored.

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