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.

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Definitions:

Dominant Inheritance

A pattern of inheritance in which an affected individual has one copy of a mutated gene that dominates the normal gene, leading to the manifestation of a trait or disorder.

Intellectual Disability

A situation described by considerable impairments in both intellectual abilities and in the adaptive behavior that includes a variety of daily social and practical skills.

Psychogenic Factors

Mental or emotional forces that can influence the occurrence or severity of a physical or psychological condition.

Autism Spectrum Disorder

A spectrum of conditions affecting neurodevelopment, identified by difficulties in social interaction, recurring behaviors, and issues with both spoken and nonverbal communication.