A company using the periodic inventory system correctly recorded a purchase of merchandise,but the merchandise was not included in the physical inventory count at the end of the accounting period.The error caused which of the following?

A) An understatement of both net income and inventory.
B) An overstatement of inventory,purchases,and accounts payable.
C) An understatement of inventory,purchases,and accounts payable.
D) An overstatement of net income and inventory.

Periodic Inventory System

An inventory system in which ending inventory and cost of goods sold are determined at the end of the accounting period based on a physical inventory count.

Physical Inventory

Physical inventory refers to the process of counting and verifying the physical stock of goods a company holds in its possession.

Net Income

The net income of a business following the deduction of all costs, such as operational expenses and taxes, from its overall revenue.