For the Year Ending December 31, Orion, Inc

Multiple Choice

For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?

A) revenues are overstated by $4,200
B) net income is overstated by $2,300
C) expenses are overstated by $6,500
D) expenses are understated by $3,500