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

question 17

Multiple Choice

Assume that a $500 purchase invoice received close to year-end is not recorded in fiscal 2019, but the inventory is appropriately included in the ending inventory count. What impact will this have on fiscal 2020 financial reporting?

• A)Cost of sales is understated by $500.
• B)Gross margin is understated.
• C)Operating expenses are overstated by $500.
• D)Operating profit is overstated by $500.

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Definitions:

International Trade

International trade involves the exchange of goods, services, and capital across international borders or territories, influenced by factors such as comparative advantage, exchange rates, and global economic policies.

Standards of Living

A measure of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Opportunity Costs

Eliminating possible positive outcomes from alternative selections by choosing one.

Worse Off

A situation or condition in which an individual or group is disadvantaged or in a less favorable position than before.