A Company Using a Periodic Inventory System Neglected to Record

question 52

Multiple Choice

A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end.This merchandise was omitted from the year-end physical count.How will these errors affect inventory at year-end and cost of goods sold for the year? Cost of
Inventory Goods Sold

• A) No effect Understate
• B) Understate No effect
• C) Understate Understate
• D) No effect Overstate

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Definitions:

Cash Concentration Account

A cash concentration account is a bank account used by companies to consolidate and manage their cash flows, usually involving the transfer of funds from multiple accounts into this single account.

Firm Benefits

Advantages or favorable factors resulting from the policies or practices of a particular company, including financial remuneration and non-monetary perks.

Liquidity

How effortlessly an asset can be turned into cash without altering its market price.

J. M. Keynes

An influential British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.