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

question 43

Multiple Choice

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2019 financial reporting?

• A)Beginning inventory is understated by $1,000.
• B)Gross margin is understated by $1,000.
• C)Cost of sales is understated by $1,000.
• D)Inventory is overstated on the balance sheet.

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Definitions:

Work in Process

Refers to the costs incurred for partially completed goods in manufacturing at a certain point in time.

Manufacturing Cost Elements

The primary components of manufacturing costs, typically including direct materials, direct labor, and manufacturing overhead.

Physical Unit Flow

A method of measuring and tracking the movement of physical units through a production process or system.

Unit Production Costs

The total cost associated with producing one unit of a product, including both direct costs like materials and labor, as well as allocated overhead.