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:

Flexible Benefit Programs

Employee benefit plans that allow individuals to choose from a range of benefits to customize a package that best suits their personal needs.

Benefit Audit

A system to control the efficiency of a benefit program.

Claims Audit

An examination and verification of claims made under insurance policies or benefit programs to ensure accuracy and compliance.

Blended Benefit Programs

Employee benefit plans that combine elements of traditional and flexible benefits to offer a customized approach to employee compensation and welfare.