Multiple Choice
If ending inventory is understated by $8,000 in 20X3,and assuming a constant 30% tax rate,then what will be the effect on retained earnings on December 31,20X4?
A) The 20X4 ending retained earnings will be understated by $2,400.
B) The 20X4 ending retained earnings will be overstated by $2,400.
C) The 20X4 ending retained earnings will be understated by $5,600.
D) The 20X4 ending retained earnings will be overstated by $5,600.
E) The 20X4 ending retained earnings will not be understated or overstated.
Correct Answer:
Verified
Correct Answer:
Verified
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