Widner Company Understated Its Inventory by $10,000 at December 31

question 100

Multiple Choice

Widner Company understated its inventory by $10,000 at December 31, 2010. It did not correct the error in 2010 or 2011. As a result, Widner's owner's equity was:

• A) understated at December 31, 2010, and overstated at December 31, 2011.
• B) understated at December 31, 2010, and properly stated at December 31, 2011.
• C) overstated at December 31, 2010, and overstated at December 31, 2011.
• D) understated at December 31, 2010, and understated at December 31, 2011.

Grasp the economic rationale behind achieving optimal levels of pollution and externalities through market-based mechanisms.

Understand the concept of marginal private and social benefits and costs.

Identify the role of government intervention in correcting market failures due to externalities.

Explain how taxes, subsidies, and other policy measures can be used to achieve socially optimal levels of production and consumption.

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Definitions:

Operating Lease

A leasing agreement allowing a lessee to use an asset, but the lease does not transfer ownership of the asset to the lessee.

Risk Of Obsolescence

The risk that a product or service will become outdated or no longer useful due to advancements in technology or changes in market preferences.

Income Tax

A tax imposed by the government on the income generated by individuals or entities, which varies according to the amount of income.

Land Improvements

Enhancements made to a plot of land, such as landscaping, fencing, or sidewalk construction, which increase the land's value and usefulness but may depreciate over time.