What is the net effect of the errors in FIERY’s December 31 retained earnings balance?A. Overstated by ₱ 15,400B. Overstated by ₱ 11,800C. Understated by ₱ 20,300D. Overstated by ₱ 20,300 FIERY Company's December 31 year-end financial statements had the following errors:December 31, 2021December 31, 202013,500 understated19,800 overstatedEnding inventoryDepreciation expenseUnearned rental3,600 understated5,000 UnderstatedPrepaid advertising8,000 understatedThere were no other errors during the years 2020 and 2021 and no corrections have been made for anyof the errors.

Retained earning means the amount left in business after paying all expenses and dividend to…

What is the net effect of the errors in FIERY’s December 31 retained earnings balance? A. Overstated by ₱ 15,400 B. Overstated by ₱ 11,800 C. Understated by ₱ 20,300 D. Overstated by ₱ 20,300

What is the net effect of the errors in FIERY’s December 31 retained earnings balance? A. Overstated by ₱ 15,400 B. Overstated by ₱ 11,800 C. Understated by ₱ 20,300 D. Overstated by ₱ 20,300

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

What is the net effect of the errors in FIERY’s December 31 retained earnings balance?

A. Overstated by ₱ 15,400

B. Overstated by ₱ 11,800

C. Understated by ₱ 20,300

D. Overstated by ₱ 20,300

FIERY Company's December 31 year-end financial statements had the following errors:
December 31, 2021
December 31, 2020
13,500 understated
19,800 overstated
Ending inventory
Depreciation expense
Unearned rental
3,600 understated
5,000 Understated
Prepaid advertising
8,000 understated
There were no other errors during the years 2020 and 2021 and no corrections have been made for any
of the errors.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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