JP Corporation Had Net Income of $1,000,000 for 2016

question 139

Multiple Choice

JP Corporation had net income of $1,000,000 for 2016.After issuing its financial statements,the corporation realized that it had failed to include inventory from one of its small warehouses for two years.Specifically,it forgot to include $20,000 on December 31,2015 and $30,000 on December 31,2016.Which of the following is TRUE regarding JP's 2015 net income?

• A)Net income was understated by $10,000.
• B)Net income was overstated by $10,000.
• C)Net income was understated by $30,000.
• D)Net income was overstated by $30,000.

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Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Jobs Argument

An economic perspective that emphasizes the creation or maintenance of employment as a primary consideration in policy-making.

Unfair-Competition Argument

A contention in international trade that certain practices give companies or countries an unjust advantage, such as labor exploitation or environmental bypassing.

Comparative Advantage

An economic theory that describes how countries gain from trade by specializing in goods they can produce more efficiently than others.