#3 & 7 are wrong. Correct answers below.

#3: Understatement of beginning inventory.

Cost of Goods Sold: understated (COGS = Beginning Inventory + Purchases - Ending Inventory)

Net Income: Overstated (higher COGS results in lower net income)

Retained Earnings: Overstated (net income flows into retained earnings)

#7: Overstatement of beginning inventory.

Cost of Goods Sold: Overstated (COGS = Beginning Inventory + Purchases - Ending Inventory)

Net Income: Understated (lower COGS results in higher net income)

Retained Earnings: Understated (net income flows into retained earnings)