Question $6$

If$,$ at the end of a period, a company erroneously excluded some goods from its ending

inventory and also erroneously did not record the purchase of these goods in its accounting

records, these errors would cause. $($Assume that the omitted purchase was a purchase of

merchandise on account.$)$

The ending inventory and retained earnings to be understated

No effect on net income and retained earnings

The ending inventory, cost of goods sold, and retained earnings to be understated

Cost of goods sold and net income to be understated