An Accounting Clerk Working for DBB Neglected to Record the Purchase

question 125

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

---

Definitions:

Financial Information

Data relating to the monetary performance, position, and cash flows of an organization, useful for making economic decisions.

Organization

Structured group of people working together to achieve common goals.

Accountants

Accountants are professionals who perform accounting functions such as audits or financial statement analysis according to prescribed methods.

Operating Activity

Activities that relate directly to the business's primary operations, such as sales, expenses, and cash flow from providing goods or services.