Use the Following Information for the Following Questions:
the 2019

question 67

Multiple Choice

Use the following information for the following questions:
The 2019 and 2020 financial statements of Banana Inc. contained the following errors:
$\begin{array}{c}\begin{array}{lll}\\\text {Ending inventory}\\\text { Insurance expense}\end{array}\begin{array}{c}\underline{2019}\\\text {\$ 10,000 \quad overstated}\\\text {4,800 \quad understated}\end{array}\begin{array}{c}\underline{2020}\\\text { \$ 16,000 \quad understated}\\\text {2,600 \quad overstated}\end{array}\end{array}$

-Assuming that none of the errors were detected or corrected, by what amount will 2019 income before taxes be overstated or understated?

• A) $5,200 understated
• B) $5,200 overstated
• C) $14,800 overstated
• D) $14,800 understated

---

Definitions:

Melanopsin

A photopigment found in the retina that plays a key role in regulating circadian rhythms and pupillary reflex by responding to blue light.

Photoreceptor

Specialized retinal neuron that transduces light into neural activity.

Circadian Rhythms

Natural, internal processes that regulate the sleep-wake cycle and repeat roughly every 24 hours, influencing physical, mental, and behavioral changes.

Retinohypothalamic Tract

A neural pathway that carries information from the retina to the hypothalamus, involved in regulating circadian rhythms.