Kates Company received merchandise on consignment. The company recorded the transaction as a purchase and included the goods in inventory, as of October 31. What would the effect of this be on the financial statements for October 31?

A : The net income and current liabilities would be overstated.

B : The net income, current assets, and current liabilities would all be overstated.

C : The net income would be correct and current assets and current liabilities would be overstated.

D : There would be no effect.