At the End of 20B,SAS Company Failed to Include Some

question 136

Multiple Choice

At the end of 20B,SAS Company failed to include some goods in its ending inventory and failed to record the purchase of these goods.For 20B,these two errors caused which of the following?

• A)Goods available for sale,cost of goods sold,and income to be overstated.
• B)Ending inventory,cost of goods sold,and retained earnings to be understated.
• C)Ending inventory,goods available for sale,and retained earnings to be understated.
• D)No effect on profit,working capital,or retained earnings.

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Definitions:

Factored Accounts Receivable

The process of selling accounts receivable to a third party at a discount to quickly generate cash and reduce risk of non-payment.

Commission

A fee paid for services, usually a percentage of the total cost, to an agent or employee for facilitating or completing a sale.

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount.

Total Assets

The sum of all assets owned by an entity, as recorded on the balance sheet, representing the resources controlled by the entity.