Multiple Choice Question

If ending inventory was understated at the end of Year $1,$ but counted correctly at the end of Year $2,$ and this error was not discovered until sometime in Year $3$

then:

Gross profit $($and net income$)$ was understated in Year $1$ and overstated in Year $2,$ but the error would have self$-$corrected in total.

Gross profit $($and net income$)$ was understated in Year $1$ and understated in Year $2,$ and the error would have doubled in total.

Gross profit $($and net income$)$ was overstated in Year $1$ and understated in Year $2,$ but the error would have self$-$corrected in total.

Gross profit $($and net income$)$ was overstated in Year $1$ and overstated in Year $2,$ and the error would have doubled in total.