The World Company's Financial Statements for 2014 and 2015 Contain

question 139

Multiple Choice

The World Company's financial statements for 2014 and 2015 contain the following errors:
$\begin{array} { l l l } &2015&2014\\\text { Ending Inventory } & \$ 6,000 \text { overstated } & \$ 16,000 \text { overstated } \\\text { Insurance Expense } & \$ 4,000 \text { understated } & \$ 12,000 \text { overstated }\end{array}$
-If no correcting entries were made at the end of 2014,by how much will retained earnings be overstated or understated at the end of 2015? Ignore tax consequences.

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

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