A company using the periodic inventory system correctly recorded a purchase of merchandise,but the merchandise was not included in the physical inventory count at the end of the accounting period.The error caused which of the following?
A)An understatement of both net income and assets.
B)An overstatement of inventory, purchases, and accounts payable.
C)An understatement of inventory, purchases, and accounts payable.
D)An overstatement of net income and assets.

Question

Quizplus · Accepted Answer

The understatement of the ending inventory causes both net income and assets to be understated.

A Company Using the Periodic Inventory System Correctly Recorded a Purchase