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The client received a shipment of inventory late on December 31 after the physical inventory count was completed. Because the inventory was not recorded at

The client received a shipment of inventory late on December 31 after the physical inventory count was completed. Because the inventory was not recorded at year-end, the client also did not record the related liability until January. How might the auditor detect this misstatement? Assume the purchase was for inventory with a cost of $40,000. What is the effect on accounts payable and net income in the year under audit due to the failure to record this transaction?

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