The Failure to Record a Purchase of Merchandise on Account

question 40

Multiple Choice

The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in

• A)an overstatement of assets and net income.
• B)an understatement of assets and net income.
• C)an understatement of cost of goods sold and liabilities and an overstatement of assets.
• D)an understatement of liabilities and an overstatement of equity.

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Definitions:

Digital Ad

Advertisement delivered through digital channels such as websites, social media, email, and mobile applications to promote products or services.

Conversion

The unauthorized act of taking or using someone else's property and treating it as one's own, depriving the rightful owner of it.

Personal Property

Items that are movable and not fixed to one location, including tangible goods like furniture, vehicles, and intangible rights.

Trade Secrets

Trade secrets consist of practices, designs, formulas, processes, or information that are not generally known and that provide a business with an economic advantage over competitors.