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The Accountant for the Iris Company Did Not Record a Purchase

question 100

Multiple Choice

The accountant for the Iris Company did not record a purchase of merchandise on credit for the current year, but the merchandise was correctly included in the ending inventory.Assuming a periodic inventory system, how would assets, liabilities, and retained earnings be affected on the year-end balance sheet? $\begin{array}{lll}&\text {Asssets }&\text { Liabilities}&\text { Retained Earming}\\\hlineI.&\text { No effect } & \text { Understated } & \text { Understated } \\II.&\text { Undlerstated } & \text { Understated } & \text { No effect } \\III.&\text { No effect } & \text { No effect } & \text { Overstated }\\IV.&\text { No effect } & \text { Understated } & \text { Overstated }\\\end{array}$

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Definitions:

Lungs

The primary organs of the respiratory system, responsible for gas exchange where blood is oxygenated and carbon dioxide is removed.

Fatty Plaque

Accumulation of lipids within the walls of arteries, leading to atherosclerosis and potential cardiovascular disease.

Arteries

Blood vessels that carry oxygen-rich blood away from the heart to the rest of the body.

Cusps

Pointed or elevated features, particularly in anatomy and dentistry, such as the peaks on molars or valves in the heart.