The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory 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.
Answer: d. an understatement of liabilities and an overstatement of owners' equity.
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