18. The accountant for the Fred Company did not record a purchase of merchandise on credit or include the items in the ending inventory. The effect of these omissions on assets, liabilities, and retained earnings would be (assume a periodic inventory system): Assets Liabilities Retained Earnings a. Understate Understate Understate b. Understate No effect d Understate Understate No effect Understate No effect C. No effect Understate

18. The accountant for the Fred Company did not record a purchase of merchandise on credit or include the items in the ending inventory. The effect of these omissions on assets, liabilities, and retained earnings would be (assume a periodic inventory system): Assets Liabilities Retained Earnings a. Understate Understate Understate b. Understate No effect d Understate Understate No effect Understate No effect C. No effect Understate

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

18. The accountant for the Fred Company did not record a purchase of merchandise on credit or include
the items in the ending inventory. The effect of these omissions on assets, liabilities, and retained
earnings would be (assume a periodic inventory system):
Assets
Liabilities
Retained Earnings
Understate
Understate
Understate
а.
b. Understate
Understate
No effect
No effect
d. Understate
Understate
No effect
с.
No effect
Understate

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