Use the Following Information for Questions Through

question 461

Multiple Choice

Use the following information for questions through.Ignore taxes. Peach Inc.'s financial statements for the years 2014 and 2015 contained errors as follows:
-Assuming that NONE of the errors were detected or corrected, and that no additional errors were made in 2016, by what amount will current assets at December 31, 2015 be overstated or understated?

• A)$2,000 overstated
• B)$10,000 understated
• C)$10,000 overstated
• D)$0

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Definitions:

Income Tax Rate

The proportion of income that is subject to taxation for a person or a company.

Consolidated Income Tax Return

A single income tax return filed for a group of related corporations, consolidating their tax liabilities.

Ownership

The state or fact of legal possession and control over property, which includes the rights to use, sell, or lease it.

Deferred Income Tax Asset

A tax asset that reflects a company's ability to reduce future tax liability due to deductible temporary differences.