Inventory at the End of the Year Was Inadvertently Overstated

question 68

Multiple Choice

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

• A) net income is overstated, assets are overstated, and stockholders' equity is understated
• B) net income is overstated, assets are overstated, and stockholders' equity is overstated
• C) net income is understated, assets are understated, and stockholders' equity is understated
• D) net income is understated, assets are understated, and stockholders' equity is overstated