An inventory error affects two consecutive accounting periods, assuming that the error occurs in the first period and is corrected in the second period. If the error is never found, then there is an impact in only one accounting period. The reason is that an error in the first period changes the ending inventory number, which is used to calculate the cost of goods sold in that period. Then, the incorrect ending inventory number from the first month becomes the beginning balance of inventory for the second month; once the inventory error is corrected in the second month, this corrects the ending inventory balance for the second month, which means that the error flushes out through the cost of goods sold in the second month. Thus, the net impact of an inventory error is an alteration of the cost of goods sold in the first period, followed by an exactly offsetting alteration to the cost of goods sold in the second period.