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At the end of the current year, a company overstated prepaid insurance by $72,000 and...

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Accounting

At the end of the current year, a company overstated prepaid insurance by $72,000 and understated supplies expense by $100,000. Its effective tax rate is 40%. As a result of this error, net income is:

Multiple Choice

  • Overstated by $16,800.

  • Understated by $16,800.

  • Understated by $103,200.

  • Overstated by $103,200.

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