Some inventory errors are said to be “self-correcting” in that the error has the opposite financial statement effect in the period following the error, thereby “correcting,” the original account balance errors. Despite this self-correcting feature, these errors should not be ignored. An example would be an overstatement of ending inventory at the endof 2023.

Required:
1. What is the impact of an overstatement of ending inventory at the end of 2023?
2. If a material inventory error is discovered in an accounting period subsequent to the period in which the error is made, describe the steps required to account for the error correction.