ACC 304 All Assignments ACC 304 All Assignments | Page 84

S41. The failure to record a purchase of mer-chandise on account
even though the goods are properly included in the physical inven-tory
results in
a. an overstatement of assets and net income.
b. an understatement of assets and net income.
c. an understatement of cost of goods sold and liabilities and an
overstatement of assets.
d. an understatement of liabilities and an overstatement of owners'
equity.
42. Dolan Co. received merchandise on consignment. As of March
31, Dolan had recorded the transaction as a purchase and included the
goods in inventory. The effect of this on its financial statements for
March 31 would be
a. no effect.