Use the Following Information for Questions

question 65

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 2019 covering the calendar years 2019, 2020, and 2021. This had been debited to insurance expense. In addition, on December 31, 2020, fully depreciated machinery was sold for $ 1,900 cash, but the sale was not recorded until 2021. There were no other errors during 2020 or 2021 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 2020 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:

Interpersonal Circumplex

A model that categorizes and describes human interpersonal behaviors and personality traits along two dimensions: dominance and warmth.

Skills

The ability to do something well; expertise or competence in a particular activity or domain.

Challenges

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Flow

A mental state of deep involvement and immersion in an activity where an individual experiences focus, engagement, and a sense of satisfaction.