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 the errors made in 2014 were corrected, but that the errors made in 2015 were not detected, by what amount will 2015 income before taxes be overstated or understated?
A)$5,000 overstated
B)$8,500 overstated
C)$1,500 understated
D)$1,500 overstated

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 the errors made in 2014 were corrected, but that the errors made in 2015 were not detected, by what amount will 2015 income before taxes be overstated or understated?
A)$5,000 overstated 
B)$8,500 overstated 
C)$1,500 understated 
D)$1,500 overstated

Quizplus · Accepted Answer

The errors made in 2014 were corrected, so they will not affect the 2015 income before taxes. However, the errors made in 2015 were not detected, so they will overstate the 2015 income before taxes by $5,000.

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