On December 15, 2014, Transport Company accepted delivery of merchandise that it purchased on credit. As of December 31, 2014, the company had neither recorded the transaction nor included the merchandise in its ending inventory amount because the seller\'s invoice had not been received. The effect of this omission on its balance sheet at December 31, 2014, (end of the accounting period) was that inventory and net income were overstated but liabilities were correct. net income was the only item affected by the omission. inventory and accounts payable were understated but net income was correct. assets and stockholders\' equity were understated but liabilities were correct. Solution inventory and accounts payable were understated but net income was correct. .

1. On December 15, 2014, Transport Company accepted delivery of merchandise that it purchased
on credit. As of December 31, 2014, the company had neither recorded the transaction nor
included the merchandise in its ending inventory amount because the seller's invoice had not
been received. The effect of this omission on its balance sheet at December 31, 2014, (end of the
accounting period) was that
inventory and net income were overstated but liabilities were correct.
net income was the only item affected by the omission.
inventory and accounts payable were understated but net income was correct.
assets and stockholders' equity were understated but liabilities were correct.
inventory and net income were overstated but liabilities were correct.
net income was the only item affected by the omission.
inventory and accounts payable were understated but net income was correct.
assets and stockholders' equity were understated but liabilities were correct.
Solution
inventory and accounts payable were understated but net income was correct.