Your client left the cash receipts journal open after year-end for an extra day and included January 1 cash receipts in the 12/31/XX totals.All of those cash receipts were due to cash sales.Assuming the client uses a periodic inventory system with a 12/31/XX count of the physical inventory,which of the following is most likely to be true relating to the year XX financial statements?

Question

Quizplus · Accepted Answer

Including January 1 cash receipts in the December 31 totals would result in recording sales that actually occurred in the next year in the current year. This would increase the current year's sales and, consequently, net income, making net income overstated.

Your Client Left the Cash Receipts Journal Open After Year-End