Ronn Industries Ronn Industries Reported Net Income of $95,000 for 2012. Early

Multiple Choice

Ronn Industries
Ronn Industries reported net income of $95,000 for 2012. Early in 2013, Ronn discovered that its 2012 ending inventory was overstated by $5,000.
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Refer to the information provided for Ronn Industries. Determine the effects of the inventory errors for 2012.

A) Assets and equity would have been overstated by $5,000 on the balance sheet; expenses and net income would have been understated by $5,000 on the income statement.
B) Assets and equity would have been overstated by $5,000 on the balance sheet; expenses would have been overstated by $5,000 on the income statement, thus net income would have been understated by $5,000.
C) Assets and equity would have been understated by $5,000 on the balance sheet; expenses would have been overstated by $5,000 on the income statement, thus net income would have been understated by $5,000.
D) Assets and equity would have been overstated by $5,000 on the balance sheet; expenses would have been understated by $5,000 on the income statement, thus net income would have been overstated by $5,000.