At the End of 20A, a $2,500 Understatement Was Discovered

question 51

Multiple Choice

At the end of 20A, a $2,500 understatement was discovered in the amount of the 20A ending inventory as reflected in the perpetual inventory records. What were the 20A effects of the $2,500 inventory error (before correction) ?

• A) Cost of goods sold was understated by $2,500 and pretax profit was understated by $2,500.
• B) Cost of goods sold was overstated by $2,500 and pretax profit was overstated by $2,500.
• C) Assets (inventory) were understated by $2,500 and pretax profit was overstated by $2,500.
• D) Assets (inventory) were understated by $2,500 and pretax profit was understated by $2,500.

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Definitions:

Sympathetic Nervous System

A part of the autonomic nervous system that prepares the body for action and stress responses, often referred to as the fight-or-flight response.

Fight-Or-Flight

A physiological reaction to perceived harmful events, attacks, or threats to survival, preparing the body to either confront or flee from the situation.

Mediates

Acts as a negotiator or intermediary between parties to help resolve a dispute or bring about an agreement.

Duchenne Smiles

Genuine smiles that involve contraction of both the zygomatic major muscle, which pulls up the corners of the mouth, and the orbicularis oculi muscle, which raises the cheeks and forms crow's feet around the eyes.