Use the following information for questions through.Ignore taxes. Peach Inc.'s financial statements for the years 2014 and 2015 contained errors as follows:
-Assuming that NONE of the errors were detected or corrected, by what amount will retained earnings at December 31, 2015 be overstated or understated?
A)$4,000 understated.
B)$5,000 overstated.
C)$8,500 understated.
D)$11,500 understated.

Question

Use the following information for questions through.Ignore taxes. Peach Inc.'s financial statements for the years 2014 and 2015 contained errors as follows: 
-Assuming that NONE of the errors were detected or corrected, by what amount will retained earnings at December 31, 2015 be overstated or understated?
A)$4,000 understated. 
B)$5,000 overstated. 
C)$8,500 understated. 
D)$11,500 understated.

Quizplus · Accepted Answer

Retained earnings will be understated by $8,500 if errors are not detected or corrected, as this amount represents the cumulative effect of the errors on the financial statements.

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