A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2. Which of the following events is most likely to have caused the increase? A An increase in sales volume B A purchase in December 20X1 mistakenly being recorded as happening in January 20X2 C Overstatement of the closing inventory at 31 December 20X1 D Understatement of the closing inventory at 31 December 20X1
A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2. Which of the following events is most likely to have caused the increase? A An increase in sales volume B A purchase in December 20X1 mistakenly being recorded as happening in January 20X2 C Overstatement of the closing inventory at 31 December 20X1 D Understatement of the closing inventory at 31 December 20X1
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 8PEA: Financial statement data for years ending December 31 for Holland Company follow: a. Determine the...
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A company's gross profit as a percentage of sales increased from 24% in the year ended
31 December 20X1 to 27% in the year ended 31 December 20X2.
Which of the following events is most likely to have caused the increase?
A An increase in sales volume
B A purchase in December 20X1 mistakenly being recorded as happening in January 20X2
C Overstatement of the closing inventory at 31 December 20X1
D Understatement of the closing inventory at 31 December 20X1
Give detailed solution explaining each point
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