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

question 107

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.Recording the additional liability creates an intangible asset and has no effect on net income.

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Definitions:

Kinesthesia

The sense of movement, allowing an individual to sense the position, weight, and movement of the muscles, tendons, and joints.

Synesthesia

A neurological condition in which stimulation of one sensory or cognitive pathway leads to automatic, involuntary experiences in a second sensory or cognitive pathway.

Psychokinesis

The purported ability to move or manipulate objects with the mind without physical interaction, considered a paranormal phenomenon.

Volley Principle

A theory in auditory processing stating that groups of auditory nerve fibers fire neural impulses in rapid succession, allowing for the perception of sounds higher than 1000 Hz.