Use the Following for Questions

question 119

Multiple Choice

Use the following for questions
Assume the perpetual inventory method is used.
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 have on the accounting equation?

• A)Assets and equity are reduced by $1,176.
• B)Assets and liabilities are reduced by $1,176.
• C)Assets and liabilities are reduced by $1,200.
• D)None.It is an asset exchange transaction.

---

Definitions:

Communication Structure

The organized way in which information flows within an organization or project team, including the methods and channels of communication.

Organization

An entity, such as a company, institution, or association, composed of multiple people and structured systematically to meet a common goal.

Parent Organization

A larger, overarching entity that owns or controls smaller entities or subsidiaries.

Probability Density Function

A mathematical function that specifies the probability of a continuous random variable falling within a particular range of values.