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

question 24

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)No effect on gross margin.
• C)Operating expenses are overstated by $500.
• D)Operating profit is overstated by $500.

---

Definitions:

Cones

Photoreceptor cells in the retina of the eye responsible for color vision and functional in well-lit conditions.

Rods

Photoreceptor cells in the retina of the eye that are sensitive to low light levels and are primarily responsible for night vision.

Peripheral Vision

The ability to see objects outside the direct line of vision, encompassing a wide field of view.

Trichromatic Theory

A theory of color vision that proposes the eye perceives colors through the response rates of three types of cones sensitive to specific wavelengths of light.