Assume That a $100 Purchase Invoice Received Close to Year-End

question 138

Multiple Choice

Assume that a $100 purchase invoice received close to year-end is not recorded in fiscal 2016,but the inventory is appropriately included in the ending inventory count.What impact will this have on fiscal 2016 financial reporting?

• A)Cost of sales is understated by $100.
• B)Gross margin is understated.
• C)Sales are understated by $100.
• D)Operating profit is understated by $100.

---

Definitions:

Merit

Merit refers to the quality of being particularly good or worthy, especially so as to deserve praise or reward.

Generalized

Referring to something that is widespread, not specific, affecting all or most parts of something.

Sample

A subset of individuals or elements selected from a larger population, used to make inferences or observations about the population as a whole.

Correlational

Pertaining to a research method that examines the relationship between two or more variables to determine if they are associated.