Mary Monitor, CPA, noted that ABC Co. received goods prior to year-end that were included in physical inventory but had not been recorded. In this case, which of the following adjustments should be made?

Question

Quizplus · Accepted Answer

Since the goods were received and included in physical inventory, the cost must be added to the inventory account. At the same time, since the company has not yet recorded the expense, the accounts payable liability must be increased. Therefore, the correct adjustment would be to debit inventory and credit accounts payable.

Mary Monitor, CPA, Noted That ABC Co