A Company Using the Periodic Inventory Method Correctly Recorded a December

question 46

Multiple Choice

A company using the periodic inventory method correctly recorded a December 29 purchase of merchandise, but the merchandise was not included in the physical inventory count on December 31 (end of the accounting period) . The error caused an:

• A) understatement of inventory, purchases, and accounts payable.
• B) overstatement of both income and assets by the same amount.
• C) understatement of both income and assets by the same amount.
• D) overstatement of inventory, purchases, and accounts payable.

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Definitions:

Real Output

The total value of all goods and services produced in an economy, adjusted for inflation, reflecting the actual productivity.

Per Capita

A statistical measure that divides an aggregate by the number of individuals in a population to give an average.

Industrially Advanced

Pertaining to countries or regions that have highly developed and complex industrial sectors, often characterized by innovation and high levels of production and income.

Temporary Workers

Individuals hired for a limited period, often to meet seasonal demands, project deadlines, or cover for permanent staff absences.