A company purchased $20,000 of inventory during February and will pay for it during March.Which of the following statements is false,assuming the inventory was sold during March?
A)The company's accounts payable will include the $20,000 on the February month-end balance sheet.
B)The statement of cash flows will report an operating cash outflow of $20,000 during March.
C)The income statement will report cost of goods sold of $20,000 during February.
D)The company's inventory will include the $20,000 on the February month-end balance sheet.

Question

Quizplus · Accepted Answer

The income statement reports the cost of goods sold during the period in which the inventory was sold, which in this case is March. Therefore, the income statement will report cost of goods sold of $20,000 during March, not February. The other statements are true.

A Company Purchased $20,000 of Inventory During February and Will