Assume That a $1,000 Purchase Invoice Received Close to Year-End

Multiple Choice

Assume that a $1,000 purchase invoice received close to year-end is not recorded in fiscal 2019, but the inventory is appropriately included in the ending inventory count. What impact will this have on fiscal 2019 financial reporting?

A) Purchases are overstated.
B) Purchases are understated.
C) Gross margin is understated.
D) Cost of sales is overstated.