Jason Co. accepted delivery of merchandise which it purchased on account. As of December 31, Jason had recorded the transaction, but did not include the merchandise in its inventory. The effect of this on its financial statements for December 31 would be which of the following?

net income, current assets, and retained earnings were understated.

net income was overstated and current assets were understated.

net income was understated and current liabilities were overstated.

net income was correct and current assets were understated