If a Company Overstates Its Ending Inventory Balance for 2018 $\begin{array} { c c } \text { Effect on 2018 Net Income } & \text { Effect on 2017 Net Income } \\\end{array}$

question 71

Short Answer

If a company overstates its ending inventory balance for 2018 by $10,000 and overstates its ending inventory balance for 2017 by $5,000,what are the effects on its net income for 2018 and 2017 if neither error is corrected?
$\begin{array} { c c } \text { Effect on 2018 Net Income } & \text { Effect on 2017 Net Income } \\\end{array}$
a. $\begin{array} { c c } \text { Overstated by } \$ 15,000 & \text { Overstated by } \$ 10,000 \\\end{array}$
b. $\begin{array} { c c } \text { Understated by } \$ 5,000 & \text { Overstated by } \$ 10,000 \\\end{array}$
c. $\begin{array} { c c } \text {Overstated by } \$ 5,000 & \text { Overstated by } \$ 5,000 \\\end{array}$
d. $\begin{array} { c c } \text { Overstated by } \$ 10,000 & \text { Overstated by } \$ 5,000\end{array}$

Comprehend the physiological pathways involved in emotional responses.

Explore the relationship between facial expressions and emotions.

Examine the influence of cognitive appraisals in emotion.

Relate emotions to evolutionary theories and their survival value.

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Definitions:

Present Value

The present worth of a future amount of money or series of cash flow at a given return rate.

Payable

This term refers to an amount of money that is due to be paid.

Compounded Annually

Interest on an investment that is calculated once a year, where the interest earned each year is added to the principal.

Loan Principal

The initial amount of money borrowed in a loan, excluding interest and other charges.