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1. Inventory at the end of 2021 was overstated. What is its effect net income of year 2022?

a. Overstated

b. Cannot be determined from the given information

c. No Effect

d. Understated

2. Uneamed Rent Income was not recognized in year 2021. What is its effect net income of 2021?

a. Cannot be determined from the given information

b. Overstated

c. Understated

d. No Effect

3.Which of the following is not an example of error? O

a. Incorrect classincation of an expenditure as between expense and asset.

b. Recognition of gain on fully depreciated property.

c. Failure to recognize accrual and deferral.

d. Misstatement of asset, liability or equity

4. Accrued interest income was overlooked in year 2021, what is its effect in Net income of 2023?

a. Understated

b. No Effect O

c. Cannot be determined from the given information

d. Overstated

5.Accrued salaries expense is overlooked in year 2021, what is its effect in the net income of year 2021?

a. Overstated

b. Cannot be determined from the given information

c. Understated

6.Accrued salaries expense is overlooked in year 2021, what is its effect in the net income of year 2022?

a. Understated

b. Cannot be determined from the given information

c. No Effect

d. Overstated

7.The Prepaid insurance was not recognized in year 2021. What is the effect of its omission in Retained Earnings of 2022?

a. No Effect

b. Overstated

c. Understated

d. Cannot be determined from the given information

d. No Effect