Shown below are two types of errors pertaining to inventory. For each of these errors, state the impact it has on the financial statement element or ratio in each of the column headings. Explain the impact using the words Overstates, Understates, or No Effect.

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Event Counting inventory twice at the end of the year and including this overstatement in the count results that were later used to adjust inventory Failing to record or count inventory in transit, purchased with FOB shipping point terms Cost of Goods Sold Gross Profit Inventory Accounts Retained Payable Earnings