After the Financial Statements Were Prepared for 2012, Wickham Ltd

question 29

Multiple Choice

After the financial statements were prepared for 2012, Wickham Ltd.discovered that an error had been made during the year-end inventory count and one room containing $40,000 worth of goods, at cost, had been missed.A review of the accounting records showed that all purchases had been recorded.The company's tax rate is 40%.If the error is not corrected, what would be the effect of this error on 2012 net income?

• A)$16,000 understated
• B)$24,000 overstated
• C)$24,000 understated
• D)No effect in 2012

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Definitions:

Formal Organizations

Structured groups established for a specific set of objectives or tasks, characterized by clear hierarchies and rules.

Social Change

The alteration over time in the structures, cultural patterns, and norms of a society.

Total Institutions

Places where people are separated from the rest of society and controlled by the institution in all aspects of their lives, as defined by Erving Goffman.

Coercive Organizations

Organizations where membership is not voluntary and is often maintained through force or other forms of coercion, such as prisons or the military.