Assume That a Purchase Invoice for $1,000 Was Appropriately Recorded

question 125

Multiple Choice

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2016,but the inventory was excluded in error during the ending inventory count.What impact will this not have on fiscal 2017 financial reporting?

• A)Beginning inventory is understated by $1,000.
• B)Gross margin is understated by $1,000.
• C)Cost of sales is overstated by $1,000.
• D)Inventory is overstated on the balance sheet.

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Definitions:

Firms

Business organizations or entities engaged in commercial, industrial, or professional activities, either for profit or non-profit.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as a yearly rate.

Operating Cash Flow

The cash generated from the normal operations of a business, excluding costs associated with financing or investments.

Statement of Comprehensive Income

The comprehensive income statement is a financial document that encompasses all equity alterations within a period, excluding those caused by owner investments and distributions.