1. Entity C uses a periodic inventory system. It overstated its ending inventory in 2023 because it counted the goods in one warehouse twice. The effect of this error on 2023s cost of goods sold (COGS) and net income (NI), respectively are:

   		COGS understated and NI overstated
   		COGS overstated and NI understated
   		COGS overstated and NI overstated
   		COGS understated and NI understated

2. Which of the following should not be included in the physical inventory of a company?

   		Goods held on consignment from another company.
   		Goods in transit from another company shipped FOB shipping point.
   		Goods shipped on consignment to another company.
   		All of these answer choices should be included.