In its physical inventory count at its February 28, 2017, year end, the Orange Sprocket Corporation included inventory that was being held for another company to sell on consignment. As a result, the company's inventory count showed the company having more inventory than its accounting records indicated it should have. The company adjusted its inventory and cost of goods sold accordingly. The merchandise was sold in the next year and inventory was correctly stated at February 28, 2018. Ignoring income tax, indicate the effect of this error (overstated, understated, or no effect) on each of the following at year end: 2018 2017 (a) Cash No effect No effect (b) Cost of goods sold No effect V Overstated (c) Net income No effect No effect (d) Retained earnings No effect V No effect (e) Ending inventory No effect Overstated (f) Gross profit margin ratio (40%) No effect Understated (g) Inventory turnover ratio (10 times) No effect Overstated Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost formulas during a period of declining prices on the following items: Average inventory cost method FIFO method (a) Cash (pre-tax), No effect No effect (b) Ending inventory Lower Higher (c) Cost of goods sold Higher Lower (d) Net income Lower >