Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct?
A)Accounts receivable was not affected, inventory was understated, sales were understated, and cost of goods sold was understated.
B)Accounts receivable was not affected, inventory was not affected, sales were understated, and cost of goods sold was understated.
C)Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated.
D)Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected.

Question

Quizplus · Accepted Answer

Since the sale was not recorded, accounts receivable and sales would both be understated. However, because the reduction in inventory was correctly recorded when the goods were shipped, inventory and cost of goods sold would not be affected.

Rossiter Company Failed to Record a Credit Sale at the End