If the inventory at the end of the current year is understated and the error is never caught, the effect is to:

A. Overstate income this year and understate income next year.
B. Understate income this year and overstate income next year.
C. Overstate the cost of goods sold, but have no effect on net income.
D. Understate income this year with no effect on income next year.


Answer: B

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