In Preparing Its 2014 Adjusting Entries, the ZigZag Ltd Forgot

question 14

Multiple Choice

In preparing its 2014 adjusting entries, the ZigZag Ltd forgot to adjust the Office Supplies (asset) account for the amount of supplies used up during the year. As a result of this error:

• A) 2014 profit is understated, the balance of equity is understated, and assets are understated.
• B) 2014 profit is overstated, the balance of equity is correct, and assets are overstated.
• C) 2014 profit is overstated, the balance of equity is overstated, and assets are overstated.
• D) 2014 profit is overstated, the balance of equity is overstated, and assets are ly stated.

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Definitions:

Bayes Law

A principle that details the likelihood of a particular occurrence, taking into account previously understood circumstances that may have a connection to the occurrence.

Posterior Probabilities

The updated likelihoods of events or hypotheses upon considering fresh evidence or information.

Expected Monetary Value

A statistical technique in decision-making under uncertainty, calculating the weighted average of all possible outcomes, considering both the probabilities and the monetary impacts.

Optimal Act

The best or most favorable action to take in a given situation, often determining the maximum efficiency or minimum cost.