Exhibit 23-5 Nan Company, Having a Fiscal Year Ending on December

question 69

Multiple Choice

Exhibit 23-5 Nan Company, having a fiscal year ending on December 31, discovered the following errors in 2010:
A collection of $\$ 12,000$ from a customer for rent related to January, 2011 , was recorded as revenue in 2010
Depreciation was under state d by $\$ 600$ in 2010.
The January 1, 2009, invento1y was overstated by $\$ 10,000$ .
The January 1,2010, inventory was understated by $\$ 6,000$
Insurance premiums of $\$ 2,000$ that relate to 2011 were expensed in 2010 when paid.
-Assume no other errors have occurred and ignore income taxes.
Refer to Exhibit 23-5.Net income for 2010 was

• A)overstated by $4, 600
• B)overstated by $16, 600
• C)understated by $5, 400
• D)understated by $5, 200

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Definitions:

Unreasonable Risk

A level of danger that exceeds what is considered acceptable or appropriate under given circumstances.

Negligent

Failing to take proper care in doing something, leading to damage or harm to others.

Offensive Bodily Contact

Unwanted physical interaction or touching that is considered harmful or offensive.

Apprehension

Anxiety or fear that something bad or unpleasant will happen, or the arrest of a person suspected of committing a crime.