ABC CoHas a Calendar Year-End

question 36

Multiple Choice

ABC Co.has a calendar year-end.The final merchandise purchase recorded in the system was for PO #456,received January 3^rd.The ending inventory count excluded this shipment.Assuming shipping terms on PO #456 were FOB shipping point,what misstatement,if any,exists in ABC records?

• A)Cost of goods sold has been understated,gross profit,net income,inventory,and owners' equity have been overstated.
• B)Cost of goods sold has been overstated,gross profit,net income,inventory,and owners' equity have been understated.
• C)There is no misstatement in ABC's accounts.
• D)Cost of goods sold and accounts payable have been overstated,net income and owners' equity have been understated.

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Definitions:

Instrumental Learning

A type of learning where behavior is modified by its consequences, such as through rewards or punishments, also known as operant conditioning.

Reinforcements

In behavioral psychology, any event that strengthens or increases the likelihood of a behavior repeating.

Systematic Desensitization

A therapeutic method used to reduce phobic or anxiety responses through gradual exposure to the feared object or situation coupled with relaxation techniques.

Gradual Association

The process of forming connections or associations between stimuli or ideas over time, often leading to learned behaviors or understandings.