In: Accounting
X Company prepares monthly financial statements. In January, it
purchased inventory on account. The accountant recorded the
transaction as an increase in Inventories and an increase in
Retained Earnings. As a result, which of the following is true
regarding the January financial statements?
Retained Earnings was understated.
Expenses were understated.
Accounts Payable was understated.
Inventories were understated.
Accounts Receivable was overstated.
Revenue was understated.