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

question 87

Multiple Choice

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2012 financial reporting?

• A)Cost of goods sold is understated by $1,000.
• B)Gross margin is overstated by $1,000.
• C)Ending inventory is understated by $1,000.
• D)Net income is overstated by $1,000.

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Definitions:

Disclosure Act

Legislation requiring certain information to be revealed or disclosed to the public or to specific parties, often to ensure transparency and protect consumers or investors.

Credit Card Issuers

Financial institutions that provide consumers with credit cards, extending credit for purchases and cash advances.

Anti-Predatory Lending

Legislation and regulations designed to protect borrowers from unfair, deceptive, or fraudulent practices by lenders during the loan origination process.

Underwriting Standards

Criteria used by lenders and insurers to assess the risk of applicants and determine eligibility for products.