Atomic Company Did Not Record a December 2013 Purchase of Inventory

question 7

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, 2014?

• A) Net income is correct.
• B) Stockholders' equity is correct.
• C)Net income is overstated.
• D)Stockholders' equity is overstateD.Inventory related errors including purchase cutoff errors are self-correcting on the balance sheet after two periods.

---

Definitions:

Facial Expressions

The movements or positions of the face that convey a person's emotions, intentions, or social signals.

Eastern And Western Cultures

The distinction between the diverse cultural, philosophical, social, and artistic norms prevalent in Asia, known as Eastern, and those in Europe and the Americas, referred to as Western.

Observers' Correct Judgments

Accurate assessments or conclusions made by individuals watching or analyzing a situation.

Higher Levels

Often relates to advanced or complex stages or forms of thinking, processing, or functioning.