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! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! What is the combined effect on net income

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What is the combined effect on net income of a $40,000 understatement error to ending inventory for the two-year period if the error is not corrected?
Net income will be overstated by $40,000.
Net income will be understated by $40,000.
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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