Fred Received Merchandise on Consignment from Dino

question 85

Multiple Choice

Fred received merchandise on consignment from Dino.As of January 31, Fred included the goods in inventory, but did NOT record the transaction.The effect of this on Fred's financial statements for January 31 would be

• A)net income, current assets, and retained earnings were understated.
• B)net income was correct and current assets were understated.
• C)net income, current assets, and retained earnings were overstated.
• D)net income and current assets were overstated and current liabilities were understated.

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Definitions:

Buyer Receives

In a transaction, when the buyer takes possession or ownership of the purchased goods.

Encumber Goods

To place a burden or charge on goods, such as a lien or mortgage, that affects their use or transferability.

Title To Delivery

A legal concept indicating the transfer of ownership of goods from a seller to a buyer when specific conditions are met.

Small Business Loan

Financing specifically targeted to support the needs and growth of small and medium-sized enterprises, often provided with favorable terms.