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

question 128

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 2020 financial reporting?

• A)Gross margin is understated by $1,000.
• B)Cost of sales is overstated by $1,000.
• C)Ending inventory is understated by $1,000.
• D)Beginning inventory is understated by $1,000.

---

Definitions:

Securities Broker

A professional intermediary who facilitates the purchase and sale of securities on behalf of clients.

Rule 504

A provision of Regulation D of the U.S. Securities and Exchange Commission that allows companies to freely sell up to $5 million of securities in a 12-month period without extensive registration.

General Solicitations

Activities by companies to advertise or solicit a wider range of investors or the public at large, typically related to the offering of securities.

Nonpublic Issuer

An entity that does not offer its securities for sale to the general public, often subject to less stringent reporting requirements.