During Its December 31, 2017 Year-End Inventory Count, Jefferson Company

question 107

Multiple Choice

During its December 31, 2017 year-end inventory count, Jefferson Company failed to count items in transit to which it had legal title. As a result of this error, ending inventory was understated by $30,000. Assuming the company makes no errors in 2018, Jefferson's owner's equity at the end of December 2018 will be

• A) overstated by $30,000.
• B) understated by $30,000.
• C) overstated by $60,000.
• D) correct.

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Definitions:

Hereditary

Pertaining to the passing of traits from parents to their offspring through genes.

Limbic System

A complex system in the brain involved in regulating emotions, memory, and arousal.

Amygdala

A small, almond-shaped cluster of nuclei located deep within the temporal lobes of the brain, involved in processing emotions such as fear and pleasure.

Vigilance

The action or state of keeping careful watch for possible danger or difficulties, often associated with a heightened state of alertness.