Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2020 financial reporting?
A)Gross margin is understated by $1,000.
B)Cost of sales is overstated by $1,000.
C)Ending inventory is understated by $1,000.
D)Beginning inventory is understated by $1,000.

Question

Quizplus · Accepted Answer

If the inventory was excluded in error during the ending inventory count of fiscal 2019, it means that it was not accounted for in the beginning inventory of fiscal 2020. Therefore, the beginning inventory for fiscal 2020 is understated by $1,000.

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