Othello Company Understated Its Inventory by $20,000 at December 31

question 191

Multiple Choice

Othello Company understated its inventory by $20,000 at December 31, 2017. It did not correct the error in 2017 or 2018. As a result, Othello's stockholder's equity was:

• A) understated at December 31, 2017, and overstated at December 31, 2018.
• B) understated at December 31, 2017, and properly stated at December 31, 2018.
• C) overstated at December 31, 2017, and overstated at December 31, 2018.
• D) understated at December 31, 2017, and understated at December 31, 2018.

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Definitions:

Effective Price

The actual price paid by consumers after accounting for taxes, subsidies, or any other adjustments to the sticker price.

Sellers

individuals or entities that offer goods or services in exchange for payment.

Rent-Control Laws

Legislation that limits the amount landlords can charge for rent, typically aimed at making housing more affordable for tenants.

Maximum Rent

The highest price that can be charged for a property or piece of land, often regulated by law in rent-controlled areas to protect tenants from excessive rent increases.