1. In beginning of 2019, PT A paid an insurance premium of $15,000 covering the years 2019, 2020, and 2021. The prepayment was recorded with a debit to insurance expense of $15,000. There were no corrections have been made for any of the errors during 2019 and 2020. What is the effect of the errors on the balance of retained earnings at December 31, 2019?

a. no effect b. Retained earnings understated by $10,000. c. Retained earnings understated by $5,000. d. Retained earnings overstated by $15,000.

2. On December 31, 2020, the sales revenue of $5,000, incurred but not received, were not recorded. The effect of the omission of sales revenue would cause...

a. 2020 net income understated by $5,000. b. no effect. c. The balance of assets at December 31,2020 overstated $5,000. d. The balance of liabilities at December 31,2020 understated by $5,000.