Assume That a $400 Purchase Invoice Received Close to Year-End

question 51

Multiple Choice

Assume that a $400 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 overstated by $400.
• B)Gross margin is overstated.
• C)Cost of goods available for sale is understated.
• D)There is no effect on fiscal 2020.

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Definitions:

Inborn Features

Traits or characteristics present in an individual from birth, resulting from genetic inheritance.

Parasympathetic Nervous System

Part of the autonomic nervous system responsible for rest and digestion, counterbalancing the sympathetic nervous system's fight or flight response.

Somatic Nervous System

The part of the peripheral nervous system that handles voluntary control of body movements through control of skeletal muscles.

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's "fight or flight" response to stress or perceived threats.