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Problem 1: Your audit client issued a purchase order on December 20, 2020 to a vendor for an order of 1,000 units of a product destined for resale. The order was shipped and delivered on January 2, 2021 and a receiving report was issued on that date by the client. Payment for the order was made in full on January 4, 2021. The client's year-end is December 31. Should this transaction be included in the financial statements dated December 31, 2020?
a. No, the goods would not have been paid for yet.b. No, the goods had not been received yet.c. Yes, the order had been placed prior to year-end.d. Yes, goods would have been included in the inventory balance prior to year-end.
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