Exhibit 23-6 Nora Company has a fiscal year ending on December 31.Its financial statements for the years ended December 31, 2010 and 2011, contained the following errors:
$\begin{array}{lrr}
&2010&2011\
\text { Ending inventory } & \$ 9,000 \text { understated } & \$ 15,000 \text { overstated } \
\text { Bad debt expense } & 2,000 \text { overstated } & 1,000 \text { understated }
\end{array}$
- Assume no correcting entries have been made.
Refer to Exhibit 23-6.By how much was Nora's 2010 net income overstated or understated?
A)$11, 000 overstated
B)$ 7, 000 overstated
C)$ 7, 000 understated
D)$11, 000 understated

Question

Quizplus · Accepted Answer

The 2010 net income was understated by $11,000 due to the $9,000 understatement of ending inventory (which decreases net income) and the $2,000 overstatement of bad debt expense (which also decreases net income).

Exhibit 23-6 Nora Company Has a Fiscal Year Ending on December