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! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! What is the combined effect on net income
What is the combined effect on net income of a $ understatement error to ending inventory for the twoyear period if the error is not corrected?
Net income will be overstated by $
Net income will be understated by $
The errors are cumulative and the total net income error will be double.
The errors cancel out and the total net income for the two periods will be correct.
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