If a company makes an error when counting ending inventory in 2016,the effect of the error will cancel out at the end of 2017.

Name: If a company makes an error when counting ending inventory in 2016,the effect of the error will cancel out at the end of 2017.
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Question

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An inventory error in one year affects the cost of goods sold and net income for that year, but the error reverses in the following year as the beginning inventory is incorrect by the same amount, thus canceling out the effect over two years.

If a Company Makes an Error When Counting Ending Inventory