Audit planning requires that the auditor consider possible inventory errors or frauds that might occur that could affect the financial statements. For each of the types of inventory errors listed in the following table, indicate what would be the possible effect in the inventory and cost of sales accounts: overstated, understated, or no effect.

Inventory Error 1. Unrecorded receipt of inventory 2. December sales recorded in January 3. December purchase recorded in January 4. Inventory omitted during physical count. 5. Consigned out inventory omitted during physical count 6. Unrecorded shipment of inventory Inventory 1. 2. 3. 4. 5. 6. Effect on Account Cost of Sales 1. 2. 3. 4. 5. 6.