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Use the Following Information for Questions

question 62

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.
-At December 31, 2020, Grant Corp.'s auditor discovered the following errors:
1) Accrued salaries payable of $ 11,000 were NOT recorded at December 31, 2019.
2) Office supplies on hand of $ 5,000 at December 31, 2020 had been treated as expense instead of supplies inventory.
Neither of these errors was discovered nor corrected. The effect of these two errors would cause

Definitions:

Overhead Costs

Expenses not directly tied to the production of goods or services, such as rent, utilities, and administrative salaries.

Newspaper Industry

Refers to the sector of the economy that is engaged in the production and distribution of newspapers, involving both print and, increasingly, digital platforms.

Shrink

The reduction in inventory due to factors such as theft, damage, or errors in record-keeping.

Output

The total amount of goods or services produced by a company or economy in a given period.