During a Year-End Evaluation of the Financial Records of the Matthew

question 93

Multiple Choice

During a year-end evaluation of the financial records of the Matthew Company for the year ended December 31, 2016, the following was discovered:
· Inventory on January 1, 2016, was understated by $6,000.
· Inventory on December 31, 2016, was understated by $18,000.
· Rent of $20,000 collected in advance on December 29, 2016, was included in income for
2016.
· A probable, reasonably estimated contingent liability of $30,000 was not recorded as of
December 31, 2016.
Net income for 2016 before any of the above items) was $250,000. What is the corrected amount of net income for
2016? Ignore income taxes.)

• A) $300,000
• B) $208,000
• C) $212,000
• D) $218,000

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Definitions:

Capital

Refers to financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories.

Corporate Bond

A debt security issued by a corporation and sold to investors, promising to pay back with interest at a future date.

Outputs

The goods or services produced by a company or an economy.

Production Process

The series of actions or steps taken in order to create a product or service.