Walter Co Made the Following Errors in 2016: · Ending Inventory

question 46

Multiple Choice

Walter Co. made the following errors in 2016: · Ending inventory was overstated by $2,000.
· Beginning inventory was understated by $6,000.
· Purchases were overstated by $3,000.
Reported net income was $20,000. What is the correct amount of 2016 net income?

• A) $19,000
• B) $21,000
• C) $15,000
• D) $4,000

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Definitions:

Securities & Exchange Commission

A U.S. federal agency responsible for enforcing federal securities laws, regulating the securities industry, and overseeing the stock and options exchanges.

Inventories

Items held for sale in the ordinary course of business, or goods to be used in the production of goods to be sold, including raw materials, work-in-progress, and finished goods.

Current Asset

Assets expected to be converted into cash, sold, or consumed either in one year or in the operating cycle of a business, whichever is longer.