Othello Company Understated Its Inventory by $20,000 at December 31

question 93

Multiple Choice

Othello Company understated its inventory by $20,000 at December 31, 2022.It did not correct the error in 2022 or 2023.As a result, Othello's stockholder's equity was:

• A)understated at December 31, 2022, and overstated at December 31, 2023.
• B)understated at December 31, 2022, and properly stated at December 31, 2023.
• C)overstated at December 31, 2022, and overstated at December 31, 2023.
• D)understated at December 31, 2022, and understated at December 31, 2023.

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Definitions:

Retained Earnings

The portion of net income that is kept by the company instead of being paid out as dividends to its shareholders.

Venture Capital

Financing provided by investors to startup companies and small businesses with strong growth potential.

Well-Established Firms

Well-Established Firms refers to companies that have been in the market for a long period, gaining significant market share, reputation, and customer base.

Productive Efficiency

A situation where a good or service is produced at the lowest possible cost.