[The following information applies to the questions displayed below.] Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $12,500 of merchandise on account under terms 2/10, n/30. 2) The company returned $1,200 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $18,800 cash. What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?
A. Assets and stockholders' equity decrease by $1,176.
B. Assets and liabilities decrease by $1,200.
C. Assets and liabilities decrease by $1,176.
D. None. It is an asset exchange transaction.
Answer: B
You might also like to view...
A prediction that provides managers with an estimate of future revenue to be received and the units to be sold, but also serves as the basis for planning in the other functional areas, is a
A. strategic plan. B. budget. C. sales forecast. D. marketing plan. E. contingency plan.
The two primary media for warehousing liquidity are
A) money market mutual funds and money market deposit accounts. B) certificates of deposit and short-term bond funds. C) certificates of deposit and long-term bond funds. D) short-term bond funds and asset allocation funds.
Which of the following is not a factor in the FICO credit scoring?
A) Credit utilization B) Length of relationship with creditors C) Marital status D) Number of inquiries
Legitimacy tends to become more accepted as an act's connection when the job becomes more hazy.
Answer the following statement true (T) or false (F)