On December 27, 2011, Johnson Company Ordered Merchandise for Resale

question 39

Multiple Choice

On December 27, 2011, Johnson Company ordered merchandise for resale from Quantum, Inc., that cost $7,000 (terms cash within 10 days) . Quantum shipped the merchandise f.o.b. shipping point on December 28, 2011, and the goods arrived on January 2, 2012. The invoice was received on December 30, 2011. Johnson Company did not record the purchase in 2011 and did not include the goods in ending inventory. The effects on Johnson Company's 2011 financial statements were

• A) income and owners' equity were correct; liabilities were incorrect, assets were correct.
• B) income and owners' equity were correct; assets and liabilities were incorrect.
• C) income, assets, liabilities, and owners' equity were correct.
• D) income, assets, liabilities, and owners' equity were incorrect.

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Definitions:

Acetyl CoA

A critical molecule involved in metabolism, linking the breakdown of carbohydrates, fats, and proteins to energy production.

Oxaloacetate

A four-carbon molecule that participates in the citric acid cycle and gluconeogenesis within cells.

Citric Acid Cycle

A series of chemical reactions used by all aerobic organisms to generate energy through the oxidation of acetate derived from carbohydrates, fats, and proteins into carbon dioxide.

Mitochondria

Cellular organelles often referred to as the powerhouses of the cell, where respiration and energy production occur.