Asked by Darian Clark on Jun 18, 2024
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Penny Company made an inventory count on December 31 2016. During the count one of the clerks made the error of counting an inventory item twice. For the balance sheet at December 31 2016 the effects of this error are Assets ‾ Liabilities ‾ Owner’s Equity ‾\begin{array}{lll}& \underline{\text { Assets } }&& \underline{ \text { Liabilities }}& \underline{\text { Owner's Equity }}\\\end{array} Assets Liabilities Owner’s Equity
A) overstated understated overstated \begin{array}{lll}\text { overstated } & \text { understated } & \text { overstated } \\\end{array} overstated understated overstated
B) understated no effect understated \begin{array}{lll}\text { understated } & \text { no effect } && \text { understated } \\\end{array} understated no effect understated
C) overstated no effect overstated \begin{array}{lll}\text { overstated } && \text { no effect } && \text { overstated } \\\end{array} overstated no effect overstated
D) overstated overstated understated \begin{array}{lll}\text { overstated } & \text { overstated } && \text { understated }\end{array} overstated overstated understated
Inventory Count
The process of physically counting the items in stock to verify the accuracy of inventory records.
Balance Sheet
A financial statement that shows the assets, liabilities, and stockholders' equity of a company at a specific point in time.
Assets
Resources owned by a business with economic value expected to provide future benefits.
- Evaluate how mistakes in inventory influence financial statements.
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Learning Objectives
- Evaluate how mistakes in inventory influence financial statements.
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