Atomic Company Did Not Record a December 2013 Purchase of Inventory

question 102

Multiple Choice

Atomic Company did not record a December 2013 purchase of inventory on credit until January 2014. Assuming that the December 31, 2013 ending inventory was correctly determined, what is the effect of this error on the financial statements for the year ended December 31, 2013?

• A) Net income is correct.
• B) Stockholders' equity is understated.
• C)Net income is overstated.
• D)Current assets are understateD.The 2013 purchases are understated, which causes cost of goods sold to be understated and net income to be overstated.

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