In its physical inventory count at its February 28, 2017, year end, the Orange Sprocket Corporation included

Question:

In its physical inventory count at its February 28, 2017, year end, the Orange Sprocket included inventory that was being held for another company to sell on consignment. As a result, the company's inventory count showed the company having more inventory than its accounting records indicated it should have. The company adjusted its inventory and cost of goods sold accordingly. The merchandise was sold in the next year and inventory was correctly stated at February 28, 2018.
Instructions
Ignoring income tax, indicate the effect of this error (overstated, understated, or no effect) on each of the following at year end:

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...