Open Invoice Files Are Reviewed Subsequent to the Year Under

question 100

True/False

Open invoice files are reviewed subsequent to the year under audit in order to locate expenses that should be reclassified on the income statement.

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Definitions:

Periodic System

A method of inventory valuation for financial statements where purchases during the period are recorded directly to an inventory account and the cost of goods sold is determined at the end of the accounting period.

Purchase Discounts

A reduction in the purchase price, allowed by the seller to encourage early payment by the buyer.

Accounts Payable

An account representing the amounts a company owes to suppliers or creditors for goods or services received but not yet paid for, typically a current liability on the balance sheet.

Perpetual Inventory System

An inventory system that updates the quantity and cost of inventory immediately following purchase or sale activities.