I have a question regarding the ramifications of not recording inventories purchased. my question is.... if a client fails to record the purchase of inventory acquired on credit. The inventory and related creditors accounts should have been recorded but were not. What will the effect this error will have on the following: (would one of the following be Understated / Overstated / No Effect)

Assets

Liabilities

Net Profit

Explain your answer about the effect of the error on net profit. There is an assumption that purchased inventory remains unsold.