The accountant for Frieda Company did not record a purchase of merchandise on credit or include the items in the ending inventory. Assuming a periodic inventory system, the balance sheet  effects of these omissions on assets, liabilities, and retained earnings would be
 SetAssetsLiabilitiesRetained EarningsI.UnderstateUnderstateUnderstateII.UnderstateUnderstateNo effectIII.No effectUnderstateNo effectIV.UnderstateNo effectUnderstate?

A. Set I
B. Set II
C. Set III
D. Set IV


Answer: B

Business

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