If undetected,what is the effect of this error on Berkshire's 12/31/2015 balance sheet?
A)Assets understated by $600,000 and shareholders' equity understated by $600,000.
B)Assets understated by $420,000 and shareholders' equity understated by $420,000.
C)Assets understated by $600,000,liabilities understated by $180,000,and shareholders' equity understated by $420,000.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The error causes assets to be understated by $600,000. Since liabilities are understated by $180,000, the net effect on shareholders' equity is an understatement of $420,000.

If Undetected,what Is the Effect of This Error on Berkshire's