A $25,000 Overstatement of the 2019 Ending Inventory Was Discovered

question 13

Multiple Choice

A $25,000 overstatement of the 2019 ending inventory was discovered after the financial statements for 2019 were prepared.Which of the following describes the effect of the inventory error on the 2019 financial statements?

• A)Current assets were overstated and net income was understated.
• B)Current assets were understated and net income was understated.
• C)Current assets were overstated and net income was overstated.
• D)Current assets were understated and net income was overstated.

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Definitions:

Private Wrongs

Acts or omissions that cause harm or injury to specific individuals or entities, leading to civil legal actions.

Classification

The systematic arrangement or categorization of entities or items based on shared characteristics or qualities.

Tort

A civil wrong or breach of duty to another person, recognized by law as grounds for a lawsuit, resulting in an injury or harm that warrants compensation.

Intentional Tort

A wrongful act done on purpose that causes harm to another, including acts such as assault, battery, and defamation, as distinguished from negligence.