A Purchase on Credit Is Recorded Twice and Not Corrected

question 12

Multiple Choice

A purchase on credit is recorded twice and not corrected during the year-end physical inventory. Which of the following statements correctly describes the impact of this error?

• A) The current year income on the income statement is correct because purchases are overstated and ending inventory is overstated.
• B) The current year balance sheet ending inventory and accounts payable are understated.
• C) The succeeding year income on the income statement is incorrect because beginning inventory is understated.
• D) The succeeding year purchases are understated when the prior year purchases are corrected.

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