A Company Using the Periodic Inventory System Correctly Recorded a Purchase

question 85

Multiple Choice

A company using the periodic inventory system correctly recorded a purchase of merchandise,but the merchandise was not included in the physical inventory count at the end of the accounting period.The error caused which of the following?

• A)An understatement of both net income and assets.
• B)An overstatement of inventory, purchases, and accounts payable.
• C)An understatement of inventory, purchases, and accounts payable.
• D)An overstatement of net income and assets.

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Definitions:

Dollar/Yen Market

The foreign exchange market involving the trading of US dollars and Japanese yen.

Appreciate

To increase in value or price, often in the context of financial investments or currency valuations.

Current Account Deficit

is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the products it exports.

Foreign Indebtedness

The total amount of debt a country owes to foreign creditors.