A purchase on credit is recorded twice and not corrected during the year-end physical inventory. Which of the following statements correctly describes the impact of this error?

Question

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Recording a purchase on credit twice and not correcting it before the year-end physical inventory count will lead to both purchases and ending inventory being overstated. This error does not affect the accuracy of the current year's income on the income statement because the overstatement in purchases (an expense) is offset by an equal overstatement in ending inventory (an asset), which is part of the cost of goods sold calculation.

A Purchase on Credit Is Recorded Twice and Not Corrected