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) $\begin{array}{lll}\text { overstated } & \text { overstated } && \text { understated }\end{array}$

Question

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    Assets  ‾  Liabilities  ‾  Owner’s Equity  ‾ \begin{array}{lll} &  \underline{	ext { Assets } } & &  \underline{ 	ext { Liabilities }} &  \underline{	ext { Owner ' s Equity }}\\end{array} ​  Assets  ​ ​ ​  Liabilities  ​ ​  Owner’s Equity  ​ ​ A)   overstated   understated   overstated  \begin{array}{lll}	ext { overstated }  &  	ext { understated }  &  	ext { overstated } \\end{array}  overstated  ​  understated  ​  overstated  ​ B)   understated   no effect   understated  \begin{array}{lll}	ext { understated }  &  	ext { no effect }  & &  	ext { understated } \\end{array}  understated  ​  no effect  ​ ​  understated  ​ C)   overstated   no effect   overstated  \begin{array}{lll}	ext { overstated }  & &  	ext { no effect }  & &  	ext { overstated } \\end{array}  overstated  ​ ​  no effect  ​ ​  overstated  ​ D)   overstated   overstated   understated  \begin{array}{lll}	ext { overstated }  &  	ext { overstated }  & &  	ext { understated }\end{array}  overstated  ​  overstated  ​ ​  understated  ​

Thuso Lebelo · Accepted Answer

Final Answer : C

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