On April 1, a Hardware Manufacturing Firm Purchases Inventory on Account

question 59

Multiple Choice

On April 1, a hardware manufacturing firm purchases inventory on account for $700. Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.

• A)Merchandise Inventory decreases by $700 and Accounts Receivable decreases by $700.
• B)Merchandise Inventory decreases by $700 and Accounts Receivable increases by $700.
• C)Merchandise Inventory increases by $700 and Accounts Payable decreases by $700.
• D)Merchandise Inventory increases by $700 and Accounts Payable increases by $700.

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Definitions:

Posterior Probability

The probability of an event or hypothesis being true after taking into consideration new evidence or information.

Prior Probability

The probability of an event or hypothesis before new evidence is taken into account.

Bayes' Law

A theorem in probability theory used to update the probability of a hypothesis as more evidence or information becomes available.

Posterior Probability

The probability of an event or hypothesis after taking into consideration new evidence or information.