Goods purchased were shipped Dec. 31, 2018, and received as of 12/31/2018. The invoice was not...

Goods purchased were shipped Dec. 31, 2018, and received as of 12/31/2018. The invoice was not received until January 10, 2019. FOB shipping. The company’s practice is not to record liability until the receipt of the invoice. Is this an unrecorded liability as of 12/31/18? Was 2018 net income misstated?

Expert Solution

The income of 2018 was stated

Whether the invoice was received or not received the purchase of inventory leads to liability for the company.

If that liability was not represented in the financial statements then and the income was misstated to the extent of the liability or illustrate of the purchase of inventory.

So so when come to be represented in the financial statements till the date whether the invoices received or not received.

In the accounting practice of the company incorrect and and it need to be updated according to the generally accepted accounting principles.

Either the possession or invoice of the purchase inventory was not the company but the legal position was transferred to the company at the time of purchase of the inventory so the inventory to be accounted in that year only.

As per all above given points the income of 2018 was stated and it need to be updated and corrected in the financial statements.

These are all the expressions and points required to solve the question.

I hope ,all the above given points and explanations are useful and helpful to you.

Thank you.

ekkarill92 answered 2 days ago

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