A $15,000 Overstatement of the 20X2 Ending Inventory Was Discovered

question 158

Multiple Choice

A $15,000 overstatement of the 20X2 ending inventory was discovered after the financial statements for 20X2 were prepared. What was the effect of the inventory error on the 20X2 financial statements?

• A) Current assets were overstated and profit was understated.
• B) Current assets were understated and profit was understated.
• C) Current assets were understated and profit was overstated.
• D) Current assets were overstated and profit was overstated.

---

Definitions:

Clubbed

A condition, typically referring to the broadening and thickening of the ends of fingers or toes, often associated with underlying medical conditions.

Power Outage

A situation where there is a temporary loss of electrical power to an area.

Own Business

The act of focusing on one’s own tasks or affairs, not involving oneself in the matters of others.

Frustration

A feeling of dissatisfaction, often accompanied by anxiety or depression, resulting from unfulfilled needs or unresolved problems.