Assume That a $500 Purchase Invoice Received Close to Year-End

Multiple Choice

Assume that a $500 purchase invoice received close to year-end is not recorded in fiscal 2012, but the inventory is appropriately included in the ending inventory count. What impact will this have on fiscal 2013 financial reporting?

A) Cost of sales is understated by $500.
B) No effect on gross margin.
C) Operating expenses are overstated by $500.
D) Operating profit is overstated by $500.