Use the following information for questions 92 through 94.
Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows:
-Assume that no correcting entries were made at December 31, 2014, or December 31, 2015 and that no additional errors occurred in 2016. Ignoring income taxes, by how much will working capital at December 31, 2016 be overstated or understated?
A) $0
B) $ 4,000 overstated
C) $ 4,000 understated
D) $10,000 understated

Question

Use the following information for questions 92 through 94.
Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained errors as follows: 
-Assume that no correcting entries were made at December 31, 2014, or December 31, 2015 and that no additional errors occurred in 2016. Ignoring income taxes, by how much will working capital at December 31, 2016 be overstated or understated?
A) $0 
B) $ 4,000 overstated 
C) $ 4,000 understated 
D) $10,000 understated

Quizplus · Accepted Answer

If no correcting entries were made and no additional errors occurred, the errors would offset each other in the calculation of working capital, leaving it neither overstated nor understated.

Use the Following Information for Questions 92 Through 94