Mark Company Overstated the Beginning Inventory on January 1, 2016

Multiple Choice

Mark Company overstated the beginning inventory on January 1, 2016, by $20,000. No other errors were identified. If the error is not discovered, which of the following net income effects related to the inventory error are true? $${ \text { Net Income } } \\\begin{array} { l l l l } \hline&2015&2016&2017\\\hline\text { I. } & \text { understated } & \text { overstated } & \text { correct } \\\text { II. } & \text { overstated } & \text { understated } & \text { correct } \\\text { III. } & \text { correct } & \text { understated } & \text { overstated } \\\text { IV. } & \text { overstated } & \text { understated } & \text { overstated }\end{array}$$

A) I
B) II
C) III
D) IV