Touch Tronix, Inc

question 231

Multiple Choice

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. During December 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Advanced Communications, Inc. was dissatisfied with 25% of the merchandise it received due to inferior quality. On December 21, 2014, Advanced Communications, Inc. returns the goods to Touch Tronix, Inc. for credit. Which of the following is true regarding the statement of financial position for Advanced Communications, Inc. at December 31, 2014?

• A) Assets will increase by €255,000 and liabilities will increase by €255,000.
• B) Assets will decrease by €255,000 and liabilities will decrease by €255,000.
• C) Assets will decrease by €330,000 and liabilities will decrease by €330,000. d Assets will increase by €330,000 and liabilities will increase by €330,000.

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Definitions:

Consumer Goods

Finished products consumed by individuals or households to satisfy their immediate wants or needs, such as food, clothing, and electronics.

Limited Partnerships

A form of partnership consisting of one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who are liable only to the extent of their investments.

Corporate Income Taxes

Taxes imposed on the net income or profit of corporations, calculated after deducting expenses like cost of goods sold and wages.

Expected Profit Rate

The forecasted return on an investment or business venture, calculated as the potential profit over time divided by the initial cost.