For each of the independent situations described below select the appropriate inherent risk factor described and the effect (overstatement or understatement) of the inherent risk factor on the companys net income using the following:

Risk factors:

Complexity Estimate Volume Industry Susceptibility to theft Situation Inherent Risk Factor Effect of Inherent Risk Factor on Companys Net Income Global Co. imports most of its products from a foreign supplier. During year 1, a new technology made part of the Global Co. inventory obsolete.