Use the Following Information for Questions

question 2

Multiple Choice

Use the following information for questions.
Cheyenne Ltd.'s December 31 year-end financial statements contained the following errors: An insurance premium of $3,600 was prepaid in 2016 covering the calendar years 2016, 2017, and 2018.This had been debited to insurance expense.In addition, on December 31, 2017, fully depreciated machinery was sold for $1,900 cash, but the sale was not recorded until 2018.There were no other errors during 2017 or 2018 and no corrections have been made for any of the errors.Ignore income tax considerations.
-What is the total net effect of the errors on Cheyenne's 2017 net income?

• A)Net income understated by $2,900
• B)Net income overstated by $1,500
• C)Net income overstated by $2,600
• D)Net income overstated by $3,000

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Definitions:

Earnings

The amount of money that an individual or business receives in exchange for providing a service or through investing capital.

Political Participation

The involvement of citizens in the political process, ranging from voting in elections to engaging in political discussions or activism.

Daycare

A service that provides care and supervision for children while their parents are at work or engaged in other activities.

Labour Force Participation

The portion of the working-age population (usually those aged 15-64) that is either employed or actively looking for work.