Use the following information for questions.
Giselle Ltd.is a calendar-year corporation.Its financial statements for the years 2018 and 2017 contained errors as follows:
-Assume that no correcting entries were made at December 31, 2017, or December 31, 2018 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)$6,000 understated

Question

Use the following information for questions.
Giselle Ltd.is a calendar-year corporation.Its financial statements for the years 2018 and 2017 contained errors as follows: 
-Assume that no correcting entries were made at December 31, 2017, or December 31, 2018 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)$6,000 understated

Quizplus · Accepted Answer

Since no correcting entries were made and no additional errors occurred in 2016, the working capital at December 31, 2016 remains unaffected by any errors from subsequent years.

Use the Following Information for Questions