The accountant for the Fred Company did not record a purchase of merchandise on credit or include the items in the ending inventory. The effect of these omissions on assets, liabilities, and retained earnings would be (assume a periodic inventory system):

Assets

Liabilities

Retained Earnings

a.	Understate      Understate          Understate
b.	Understate      Understate          No effect
c.	No effect       Understate          No effect
d.	Understate      No effect           Understate

Answer rating: 100% (QA)

Solution Option b is correct ie assets and liabilities wer... View the full answer