Assume That the 2020 Errors Are Not Discovered in 2021

question 135

Multiple Choice

Assume that the 2020 errors are not discovered in 2021. However, ending inventory at the end of year 2021 is recorded at correct amount. By how much will 2021 net income be over or understated?

• A) $6,000 overstated
• B) $4,000 understated
• C) $4,000 overstated
• D) $6,000 understated
• E) There is no effect on net income.

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