Q21. (5 marks) Analyze the effects of inventory errors on a firm's financial statements at the end of the period. Assume that all sales and purchases are on account a. In the year-end physical count of inventory, goods delivered from the consignor were included in the count. How does this error affect the following amounts (overstated, understated, or no effect)? Use the drop down menu for your response. 1) Inventory: 2) Retained earings: 3) Current ratio: Cost of goods sold: b. Goods in transit shipped "FOB destination" to a customer were recorded as a sale and excluded from ending inventory. How does this error affect the following amounts (overstated, understated, or no effect)? Use the drop down menu for your response. 1) Inventory: 2) Accounts receivable: 3) Accounts payable: 4) Working capital: 5) Cost of goods sold: 6) Net income