Assume That a $500 Purchase Invoice Received Close to Year-End

question 93

Multiple Choice

Assume that a $500 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 2017 financial reporting?

• A)Cost of sales is understated by $500.
• B)No effect on gross margin.
• C)Operating expenses are overstated by $500.
• D)Operating profit is overstated by $500.

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