The Following Accounting Errors Occurred in 20x3, but Were Not

The following accounting errors occurred in 20x3, but were not discovered until 20x4: Purchases for 20x3 overstated by = $400 Ending 20x3 inventory overstated by = $400
Depreciation expense for 20x3 overstated by = $400
The combined effect of these three errors caused 20x3 pre-tax income to be:

A) Overstated by $800.
B) Understated by $1,200.
C) Understated by $400.
D) Overstated by $400.

Correct Answer:

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