Axelrods Inc A)Option a
B)Option B
C)Option C
D)Option D

Multiple Choice

Axelrods Inc.uses a perpetual inventory system.In Dec 2013, the accountant neglected to record a purchase of merchandise on account at year end.This merchandise was also omitted from the year-end physical count.How will this error affect assets, liabilities, and shareholders' equity at year end and net income for the year? $\begin{array}{llll}&\text { Assets } & \text { Liabilities } & \text { Shareholders' Equity }& \text { Net Income }\\\hlineA.&\text { No effect } & \text { Understated } & \text { Overstated } & \text { Overstated. } \\B.&\text { No effect } & \text { Overstated } & \text { Understated } & \text { Understated. } \\C.&\text { Understated } & \text { Understated } & \text { No effect } & \text { No effect. } \\D.&\text { Understated } & \text { No effect } & \text { Understated } & \text { Understated }\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D