Your Client Left the Cash Receipts Journal Open After Year-End

question 9

Multiple Choice

Your client left the cash receipts journal open after year-end for an extra day and included January 1 cash receipts in the 12/31/XX totals.All of those cash receipts were due to cash sales.Assuming the client uses a periodic inventory system with a 12/31/XX count of the physical inventory,which of the following is most likely to be true relating to the year XX financial statements?

• A)Sales are understated.
• B)Accounts receivable are understated.
• C)Inventory is overstated.
• D)Net income is overstated.

Recognize how variable and absorption costing impact the income statement presentation, specifically gross profit, contribution margin, and net profit.

Understand the application of variable and absorption costing in determining the cost of goods sold.

Grasp the implications of inventory level changes on operating income under both costing methods.

Identify costs associated with the manufacturing environment, such as controllable and uncontrollable costs.

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Definitions:

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Mental and emotional entities that predispose an individual to respond in a particular way to objects, people, and situations.

Fairness

The quality of making judgments that are free from discrimination or dishonesty.

Standard Routine

A standard routine involves a set of regular activities or procedures typically followed to maintain order, efficiency, or performance in various contexts.

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The manner in which healthcare services are provided to patients, including methodologies, treatments, and management of patient health.