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By how much will net income be over or understated

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Question - Bella Ltd. is a calendar-year corporation. Bella uses a periodic inventory system. Its financial statements for 2020 contained errors as follows:

2020 Ending inventory $4,000 overstated

Depreciation expense $2,000 understated

By how much will net income for 2020 be over or understated?

A. $6,000 overstated

B. $2,000 understated

C. $4,000 overstated

D. $6,000 understated

E. There is no effect on net income.

Reference no: EM132494392

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