For several years, an entity's physical inventory count has been lower than what was shown on the books at the time of the count so that downward adjustments to the inventory account were required. Contributing to the inventory problem could be weaknesses in internal controls that led to the failure to record some
A) Purchases returned to vendors.
B) Sales returns received.
C) Sales discounts allowed.
D) Cash purchases.

Question

Quizplus · Accepted Answer

Failure to record purchases returned to vendors would result in inventory being overstated on the books, as the returned items would still be counted as part of the inventory.

For Several Years, an Entity's Physical Inventory Count Has Been