Choice "a" is correct.Goods shipped FOB shipping point should be included in Garson’s ending inventory because title passed to Garson when the goods were shipped. Therefore, ending inventory (an asset) is understated. If ending inventory is understated, cost of goods sold is overstated for the period (Beginning inventory + Purchases – Ending inventory = Cost of goods sold), which results in net income being understated. If net income is understated for the period, the error causes retained earnings to be understated for the period.

Choice "b" is incorrect. Goods shipped FOB shipping point should be included in Garson’s ending inventory because title passed to Garson when the goods were shipped. Therefore, ending inventory (an asset) is understated. If ending inventory is understated, cost of goods sold is overstated for the period (Beginning inventory + Purchases – Ending inventory = Cost of goods sold), which results in net income being understated. If net income is understated for the period, the error causes retained earnings to be understated for the period.
Choice "c" is incorrect. Goods shipped FOB shipping point should be included in Garson’s ending inventory because title passed to Garson when the goods were shipped. Therefore, ending inventory (an asset) is understated. If ending inventory is understated, cost of goods sold is overstated for the period (Beginning inventory + Purchases – Ending inventory = Cost of goods sold), which results in net income being understated. If net income is understated for the period, the error causes retained earnings to be understated for the period.

Choice "d" is incorrect.​Goods shipped FOB shipping point should be included in Garson’s ending inventory because title passed to Garson when the goods were shipped. Therefore, ending inventory (an asset) is understated. If ending inventory is understated, cost of goods sold is overstated for the period (Beginning inventory + Purchases – Ending inventory = Cost of goods sold), which results in net income being understated. If net income is understated for the period, the error causes retained earnings to be understated for the period.​