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

question 117

Multiple Choice

Assume that a $500 purchase invoice received close to year-end is not recorded in fiscal 2012, but the inventory is appropriately included in the ending inventory count. What impact will this have on fiscal 2013 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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Definitions:

Normally Distributed

Describes a distribution of data that follows a bell curve, where most occurrences take place near the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values are from the mean.

Bottling Machine

Equipment used for filling bottles with liquid products, such as water, soda, or beer, and sealing them for distribution.

Normal Model

A type of statistical distribution, also known as the Gaussian distribution, characterized by a symmetric bell-shaped curve.