An Accounting Clerk Working for DBB Neglected to Record the Purchase

question 54

Multiple Choice

An accounting clerk working for DBB neglected to record the purchase of merchandise in 20x1, which was, shipped f.o.b.shipping point on December 20, 20x1, and which arrived on December 31.The goods were included in the ending 20x1 inventory.What was the effect on DBB's 20x1 cost of goods sold?

• A)Cost of goods sold was understated.
• B)Cost of goods sold was overstated.
• C)Cost of goods sold was correct.
• D)Data are not available to determine effect on cost of goods sold.

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Definitions:

Marginal Revenue Product Curve

A graphical representation showing how the extra revenue generated from employing one more unit of a resource changes as more of the resource is employed.

Demand Curve

A visual map indicating how consumer demand for a product varies with changes in its price.

Labor

The work performed by humans which is often measured in terms of hours or productivity and is a fundamental factor of production.

Market Wage

The prevailing pay rate for work of a given nature in a specific market or industry.