Inventory and net income were overstated

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Reference no: EM13755215

On December 15, 2014, Transport Company accepted delivery of merchandise that it purchased on credit. As of December 31, 2014, 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, 2014, (end of the accounting period) was that

inventory and net income were overstated but liabilities were correct.

net income was the only item affected by the omission.

inventory and accounts payable were understated but net income was correct.

assets and stockholders' equity were understated but liabilities were correct.

Reference no: EM13755215

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