On December 15,2019,Transport Company accepted delivery of merchandise that it purchased on credit.As of December 31,2019,the company had neither recorded the transaction nor included the merchandise in its ending inventory amount because the seller's invoice had not been received.The effect of this omission on its balance sheet at December 31,2019, (end of the accounting period)was that

Question

Quizplus · Accepted Answer

The omission of recording the purchased merchandise and accounts payable will result in the understatement of inventory and accounts payable. However, as the company has not recognized the expense related to the purchase, net income will remain correct. This will result in the understatement of assets and stockholders' equity and the correct presentation of liabilities on the balance sheet.

On December 15,2019,Transport Company Accepted Delivery of Merchandise That It