Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2012 financial reporting?
A)Cost of goods sold is understated by $1,000.
B)Gross margin is overstated by $1,000.
C)Ending inventory is understated by $1,000.
D)Net income is overstated by $1,000.

Question

Quizplus · Accepted Answer

The inventory exclusion results in ending inventory being understated, which affects the balance sheet and cost of goods sold calculation.

Assume That a Purchase Invoice for $1,000 Was Appropriately Recorded