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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Definitions:

Criterion

A principle or standard by which something can be judged or decided.

Hypersexual Disorder

A condition characterized by excessive preoccupation with sexual fantasies, urges, or behaviors that is distressing or disruptive to daily functioning.

Diagnostic Criteria

A set of standardized guidelines used to diagnose disorders, including substance use disorders, based on specific symptoms and the duration of those symptoms.

Specifier

A specifier is a term or phrase used in psychiatric diagnosis to provide additional information about a disorder, such as its severity, course, or specific characteristics.