During the Taking of Its Physical Inventory on December 31

question 55

Multiple Choice

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be

• A) assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000
• B) assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement
• C) assets, retained earnings, and net income all overstated by $70,000
• D) assets and retained earnings overstated by $70,000; and net income understated by $70,000

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Definitions:

Grief Reactions

Emotional and psychological responses that occur after the loss of a loved one or the experience of significant loss, varying greatly among individuals.

Bereaved Spouses

Individuals who have lost their husband or wife, experiencing the process of grieving and mourning.

Resilient Pattern

The ability of an individual or system to adapt and recover from adversity, trauma, tragedy, threats, or significant sources of stress.

Secondary Sexual Characteristics

Physical traits that emerge during puberty, not directly involved in reproduction but which distinguish the biological sexes, such as breast development in females and facial hair in males.