An Item of Inventory Purchased This Period for $15

question 116

Multiple Choice

An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is not true?

• A) The cost of sales of the following year will be understated.
• B) The current year's income is understated.
• C) The closing inventory of the current year is understated.
• D) Income of the following year will be understated.

---

Definitions:

Single Covalent

A type of chemical bond where two atoms share one pair of electrons.

Ionic Bond

A chemical bond formed between two ions with opposite charges through the transfer of electrons from one atom to another.

Triple Covalent

A type of chemical bond where three pairs of electrons are shared between two atoms.

Hydrogen Bond

An unstable linkage between two molecules due to the electrostatic force acting between a proton within one molecule and an electronegative atom in the other.