Wilma received merchandise on consignment from Bubbles.As of January 31, Wilma included the goods in inventory, but did not record the transaction.The effect of this on Wilma's financial statements for January 31 would be
A)net income, current assets, and retained earnings were understated.
B)net income was correct and current assets were understated.
C)net income, current assets, and retained earnings were overstated.
D)net income and current assets were overstated and current liabilities were understated.

Question

Quizplus · Accepted Answer

Wilma incorrectly included consigned goods in her inventory, which she does not own. This overstates inventory (a current asset), leading to an overstatement of net income and retained earnings.

Wilma Received Merchandise on Consignment from Bubbles