JP Corporation Had Net Income of $1,000,000 for 2017

question 25

Multiple Choice

JP Corporation had net income of $1,000,000 for 2017.After issuing its financial statements,the company realized that it had failed to include inventory from one of its small warehouses for several years.Specifically,it forgot to include $20,000 on December 31,2016 and $30,000 on December 31,2017.Which of the following is TRUE regarding JP's 2017 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:

Expansion Project

A business initiative aimed at increasing the size, reach, or capabilities of the company, often requiring significant capital investment.

Capital Rationing

The process of selecting profitable projects to invest in, limited by the availability of funds.

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment, considering the time value of money.

Mutually Exclusive

Events or decisions that cannot occur or be taken simultaneously; selecting one option precludes the choice of the other.