A Company Failed to Report the $600,000 Additional Liability for Its

question 105

Multiple Choice

A company failed to report the $600,000 additional liability for its underfunded pension plan.Its tax rate is 30%.As result of this error,retained earnings would be:

• A)Unaffected.
• B)Overstated by $600,000.
• C)Overstated by $420,000.
• D)Overstated by $180,000.

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Definitions:

Return on Investment

A measure of the profitability of an investment, calculated by dividing the net profit from the investment by the cost of the investment.

Lead Indicators

Metrics that precede an event and can be used to predict future trends or performance outcomes.

Net Book Value

The value of an asset after accounting for depreciation or amortization, representing its current worth on the balance sheet.

Investment Centres

Units or divisions within a company that are responsible for making investment decisions and are evaluated based on their return on investments.