An entity's physical count of inventories was higher than the inventory quantities per the perpetual records. This situation could be the result of the failure to record
A) Sales.
B) Sales discounts.
C) Purchases.
D) Purchase returns.

Question

Quizplus · Accepted Answer

If purchases are not recorded, the physical inventory count will be higher than the inventory quantities per the perpetual records because the inventory will have been received but not accounted for in the records. Failure to record sales or sales discounts would likely result in a lower physical inventory count than recorded in the perpetual records, while failure to record purchase returns would not necessarily affect the physical inventory count.

An Entity's Physical Count of Inventories Was Higher Than the Inventory