Question: 1 . An invoice for $4000, dated december 30 2020, and bearing terms of FOB shipping point. The goods arrived on december 31 2020 and

1. An invoice for $4000, dated december 30 2020, and bearing terms of FOB shipping point. The goods arrived on december 31 2020 and were included in the physical inventory taken that day(to determine year-end inventory and to calculate the cost of goods sold). The invoice was not received until January 8 2021 and was entered as a January transaction. How is the net income in the year 2020 being affected?

A.More information is needed to make a judgement

B.Net income is understated

C.Net income is not affected

D.Net income is overstated

2. As invoice of $1400, dated December 30 2020 and bearing terms of FOB shipping point. The goods were shipped on December 30 2020 but were not received until January 4 2021. The invoice was also received and recorded on January 4 2021.How was net income in the year 2020 being affected?

A.Net income is being understated

B.Net income is being overstated

C. Not enough information is provided to make a judgement

D.Net income is not affected.

3. January 4,2020 : Hollis Mfg. Corporation got a returned check form its bank because it approved to be uncollectible. The check was from a customer and was deposited with the bank on 12/30/2019. The check was material in an amount.Hollis recorded the check as cash receipt on 12/30/2019. Which of the following is correct?

A: Adjusting entry should be made to 2019 financial statement.

B: This should be disclosed in the notes to the financial statement

C: This should be disclosed in the audit report.

D: None of the answers are correct.

4. Which of the following is correct concerning confirmation of accounts payable?

A.It is a generally accepted auditing procedure that is required.(false)

B.Confirmation is not a required procedure on account payables.

C.It is often unnecessary because accounts payable balances at the balance sheet date may not be paid before the audit is completed.

D. The basis for selection of accounts is largest balances due.

5. As a result of reduced sales, workers were laid off in January. On February 5, 2020, all workers went on strike. Which of the following is correct?

A: This should be disclosed in the notes to the financial statement

B: This should be disclosed in the audit report

C: Both A & B

D: Neither A nor B

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