S41 . The failure to record a purchase of merÂchandise on account even though the goods are properly included in the physical invenÂtory 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 .
42 . Dolan Co . received merchandise on consignment . As of March 31 , Dolan had recorded the transaction as a purchase and included the goods in inventory . The effect of this on its financial statements for March 31 would be
a . no effect .
b . net income was correct and current assets and current liabilities were overstated .