Effects of Errors in Inventory Valuation
Show the Effect, If

Essay

Effects of errors in inventory valuation
Show the effect, if any, of each of the following errors on ending inventory, cost of goods sold, gross profit on sales, and net income by placing the appropriate symbol in each column. In use is the periodic inventory system. Use the following symbols: O = Overstated, U = Understated, NE = No Effect.
$$\begin{array} { | l | l | l | l | l | l | } \hline & & \begin{array} { c } \text { Ending } \\\text { Inventory }\end{array} & \begin{array} { c } \text { Cost of } \\\text { Goods } \\\text { Sold }\end{array} & \begin{array} { c } \text { Gross } \\\text { Profit on } \\\text { Sales }\end{array} & \begin{array} { c } \text { Net } \\\text { Income }\end{array} \\\hline \text { (a) } & \text { Ending inventory is overstated } & & & & \\\hline \text { (b) } & \text { Purchases are understated } & & & & \\\hline \text { (c) } & \text { Beginning inventory is overstated } & & & & \\\hline \text { (d) } & \text { Net sales are overstated } & & & & \\\hline \text { (e) } & \text { Beginning inventory is understated } & & & & \\\hline \text { (f) } & \text { Ending inventory is understated } & & & & \\\hline\end{array}$$