The Following Accounting Errors Occurred in 20x1; They Were Discovered

question 118

Essay

The following accounting errors occurred in 20x1; they were discovered in 20x2: Purchases for 20x1 Overstated $600; ending 20x1 inventories Overstated $600; and depreciation expense for 20x1 Overstated $600.The combined effect of these errors caused 20x1 pre-tax income to be:
Overstated $________; or Understated by $________; or No Effect _.

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Definitions:

Psychosis

A mental disorder characterized by a disconnection from reality, which may include delusions, hallucinations, and disordered thinking.

Alcohol

A chemical compound, specifically ethanol, which is found in drinks like beer, wine, and spirits, and can alter consciousness and impair cognitive and motor functions.

Cirrhosis

A chronic liver disease marked by degeneration of cells, inflammation, and fibrous thickening of tissue, often caused by alcoholism or hepatitis.

Blackouts

Episodes of memory loss for events that occurred while a person was intoxicated or during certain medical conditions.