Penny Company Made an Inventory Count on December 31 2016 $\begin{array}{lll}& \underline{\text { Assets } }&& \underline{ \text { Liabilities }}& \underline{\text { Owner's Equity }}\\\end{array}$

Short Answer

Penny Company made an inventory count on December 31 2016. During the count one of the clerks made the error of counting an inventory item twice. For the balance sheet at December 31 2016 the effects of this error are $\begin{array}{lll}& \underline{\text { Assets } }&& \underline{ \text { Liabilities }}& \underline{\text { Owner's Equity }}\\\end{array}$
A) $\begin{array}{lll}\text { overstated } & \text { understated } & \text { overstated } \\\end{array}$
B) $\begin{array}{lll}\text { understated } & \text { no effect } && \text { understated } \\\end{array}$
C) $\begin{array}{lll}\text { overstated } && \text { no effect } && \text { overstated } \\\end{array}$
D) $\begin{array}{lll}\text { overstated } & \text { overstated } && \text { understated }\end{array}$