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Assume that the amount of ending inventory is overstated in Year 1. Further assume the overstatement in Year 1 is not discovered and the ending inventory in Year 2 is reported accurately. Under these circumstances,
A: cost of goods sold in Year 2 will be understated.
B: total assets in Year 2 will be understated.
C: the Year 2 ending balance in retained earnings will be accurate.
D: none of the answers are correct.
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Explain the meaning of ‘integrity' and its importance in professional relationships such as those described in the case.
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