Asked by Melody Martenson on Jul 15, 2024
Verified
Office Supplies (not used for resale) bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Merchandise Inventory. This error will cause:
A) net income to be overstated.
B) net income to be understated.
C) no effect on net income or total assets.
D) total assets to be understated.
Merchandise Inventory
Goods held by a company for the purpose of sale to customers in the ordinary course of business.
Accounts Payable
Money owed by a company to its suppliers or creditors for goods and services received.
- Identify the effects of errors in recording transactions on net income and total assets or liabilities.
Verified Answer
AB
Andrea BlackJul 19, 2024
Final Answer :
C
Explanation :
The error involves two balance sheet accounts (Accounts Payable and Merchandise Inventory) and does not directly affect any income statement accounts, thus it has no impact on net income or total assets.
Learning Objectives
- Identify the effects of errors in recording transactions on net income and total assets or liabilities.
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