Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct?
A) Accounts receivable was not affected, inventory was not affected, sales were understated, and cost of goods sold was understated.
B) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated.
C) Accounts receivable was not affected, inventory was understated, sales were understated, and cost of goods sold was understated.
D) Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected.

Question

Quizplus · Accepted Answer

Accounts receivable was understated because the credit sale was not recorded. Inventory was not affected because the reduction was correctly recorded. Sales were understated because the sale was not recorded. Cost of goods sold was not affected because it was recorded when the inventory was reduced.

Rossiter Company Failed to Record a Credit Sale at the End