What is the effect on owners equity

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Question - What is the effect on owner's equity of a $25,000 understatement of ending inventory after year two if the prior year's error is not corrected?

A: Owner's equity would be understated by $25,000.

B: Total owner's equity reported on the balance sheet at the end of the second year would be incorrect, and would be double the original error.

C: Owner's equity would be overstated by $25,000.

D: Total owner's equity reported on the balance sheet at the end of the second year would be correct.

Reference no: EM132758428

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