MATCHING

Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory. A consignor included merchandise in the hands of the consignee in ending inventory. The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000. Merchandise held on consignment was included in the count of ending inventory. Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory. Beginning inventory was understated. Purchased merchandise was shipped FOB shipping point on the last day of the year. The cost of the merchandise was not included in ending inventory. Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's ending inventory.

Net income for the current year will be understated. There will be no error effect on net income. Net income for the current year will be overstated.