To determine the effects of inventory errors on the financial statements in both the current year and the following year all you need is the cost of goods sold equation

Question

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The cost of goods sold equation can help determine the effects of inventory errors on the financial statements in both the current year and the following year, as it is a key component in determining the accuracy of a company's reported gross profit and net income. Inventory errors can impact the cost of goods sold, which can in turn affect the gross profit and net income reported on the financial statements.

To Determine the Effects of Inventory Errors on the Financial