The Accountant for Frieda Company Did Not Record a Purchase

question 70

Multiple Choice

The accountant for Frieda Company did not record a purchase of merchandise on credit or include the items in the ending inventory.Assuming a periodic inventory system, the effect of these omissions on assets, liabilities, and retained earnings would be $\begin{array}{lll}&\text {Asssets }&\text { Liabilities}&\text { Retained Earming}\\\hlineI.&\text { Understate } & \text { Understate } & \text { Understate } \\II.&\text { Understate } & \text { Understate } & \text { No effect } \\III.&\text { No effect } & \text { Understate } & \text { No effect } \\IV.&\text { Underetate } & \text { No effect } & \text { ITnderctate }\end{array}$

• A)I
• B)II
• C)III
• D)IV

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