Accrued Salaries Payable of $51,000 Were Not Recorded at December

question 1

Multiple Choice

Accrued salaries payable of $51,000 were not recorded at December 31, 2014. Office supplies on hand of $29,000 at December 31, 2015 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause

• A) 2015 net income to be understated $80,000 and December 31, 2015 retained earnings to be understated $29,000.
• B) 2014 net income and December 31, 2014 retained earnings to be understated $51,000 each.
• C) 2014 net income to be overstated $22,000 and 2015 net income to be understated $29,000.
• D) 2015 net income and December 31, 2015 retained earnings to be understated $29,000 each.

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