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19 August, 16:49

During the taking of the physical inventory, the company inadvertently counted its inventory as $98,000 instead of the correct amount of $89,000. Indicate the effect of the misstatement on the balance sheet of the current year. a. Liabilities are overstated by $9,000. b. Assets are understated by $9,000. c. Stockholders' equity is understated by $9,000. d. Assets are overstated by $9,000.

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  1. 19 August, 17:13
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    d. Assets are overstated by $9,000.

    Explanation:

    Provided that

    The physical inventory inadvertently counted = $98,000

    And, the correct amount of the physical inventory = $89,000

    Since the correct amount of the inventory is less than the uncorrected amount that results the overstated of the assets.

    Plus, the uncorrected amount of the inventory is recorded on the financial statements instead of the correct amount so ultimately the assets are overstated by $9,000
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