After the Financial Statements Were Prepared for 2012, Wickham Ltd

question 32

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 is the effect of this error on 2013 closing retained earnings?

• A)$16,000 overstated
• B)$24,000 understated
• C)$40,000 understated
• D)No effect

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Definitions:

ICD Code

International Classification of Diseases code, a system used to classify and code diagnoses, symptoms, and procedures.

DSM Diagnostic Codes

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A measure used to assess the intensity or seriousness of a condition, symptom, or problem, often used in clinical settings.

Dusky V. United States

A landmark U.S. Supreme Court case that established the standard for determining the competency of a defendant to stand trial.