While Reviewing the Books of Simon's Pest Control Service You

question 13

Multiple Choice

While reviewing the books of Simon's Pest Control Service you discover that no adjusting entry was made for estimated bad debts traceable to sales in 2018 (the company's first year of operation) . Assuming this error is not corrected, which of the following is true at year-end 2018?

• A) Assets are correct, profit is overstated
• B) Assets are overstated, profit is overstated
• C) Assets are understated, profit is overstated
• D) Liabilities are overstated, profit is understated

---

Definitions:

Advanced Placement

A program in the United States and Canada offering college-level curriculum and examinations to high school students.

International Baccalaureate

A globally recognized educational program that provides a challenging curriculum for students aimed at developing critical thinking and multicultural understanding.

Externally Scored Exams

Examinations that are marked or evaluated by individuals or entities outside of the educational institution where the exam was taken.

College Requirements

The set of academic and sometimes non-academic criteria that a student must fulfill to gain admission to a college or university.