Complete the table below by entering a plus sign to indicate overstatement, a minus sign to indicate understate$-$

ment, or a zero for no effect.

Effect of Error On

Income

Assets

Liabilities

Equity

a$.$ Ending inventory for Year $1$ understated:

Year $1$ financial statements.

Year $2$ financial statements.

b$.$ Ending inventory for Year $2$ overstated:

Year $2$ financial statements.

Year $3$ financial statements.

c$.$ Failed to record depreciation in Year $1$:

Year $1$ financial statements.

Year $2$ financial statements.

d$.$ Failed to record a liability for cash advances

received in Year $1$ related to Year $2$

revenue; instead, credited revenue $($in full$)$

erroneously in Year $1$:

Year $1$ financial statements.

Year $2$ financial statements.

Indicate whether the following items are a $($a$)$ change in accounting principle, $(b)$ change in accounting estimate,

$($c$)$ change in reporting entity, or $(d)$ correction of an error.

The controller of H&P Company discovered that inventory held on consignment was counted as part of end$-$

ing inventory.

An investment in another company is now considered a subsidiary $($due to an increase in ownership interest$)$

and will be consolidated in the financial statement of the H&P Company.

H&P Company decided to change its inventory cost method from FIFO to the average$-$cost method.