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:

Intoxicated

A condition of having physical or mental control significantly impaired by drugs or alcohol.

Defamation

A false statement or an action that harms the reputation or character of an individual, business, product, group, government, or nation.

Capacity

In legal terms, the ability of an individual or entity to enter into a contract, often requiring them to be of legal age and sound mind.

Substantive Unconscionability

A principle in contract law where a contract or a specific term is so unfairly one-sided that it is deemed unconscionable and unenforceable.