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 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.
-A company using a perpetual inventory system neglected to record a purchase of merchandise on account at year end. This merchandise was also omitted from the year-end physical count. How will these errors affect assets, liabilities, and shareholders' equity at year end and net income for the year? Assets Liabilities Shareholders' Equity Net Income

• A) no effect understate overstate overstate
• B) no effect overstate understate understate
• C) understate understate no effect no effect
• D) understate no effect understate understate

---

Definitions:

Cyclical Scheduling

Involves creating a repeating schedule of operations or activities, commonly used in manufacturing or workforce management to ensure consistent production or availability.

Registered Nurses

are healthcare professionals who have met the requirements for registration and licensure to practice nursing.

Extra Capacity

Additional production or service ability that exceeds normal operations requirements.

Late Night Shift

A work shift that takes place during the late evening to early morning hours, often outside standard business hours.