Your Company Bought a 30-Second Advertisement That Aired During the Stanley

question 121

Multiple Choice

Your company bought a 30-second advertisement that aired during the Stanley Cup finals at a cost of $1.2 million.It is legally obligated to pay for the ad but has not yet done so.How does the purchase and use of the ad time affect your company's balance sheet?

• A)It increases both assets and liabilities by $1.2 million.
• B)It increases assets and decreases Shareholders' equity by $1.2 million each.
• C)It does not affect the balance sheet.
• D)It increases liabilities and decreases Shareholders' equity by $1.2 million each.

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Definitions:

Situational Contingencies

Refers to external or internal factors that influence the effectiveness of management strategies and decision-making processes.

Organizational Design

The process of structuring an organization in a way that facilitates achieving its goals effectively and efficiently.

Formal Authority

The right bestowed upon an individual or unit to make decisions, command obedience, and enforce rules within an organization's hierarchy.

Situational Contingencies

External factors or circumstances that influence the outcome of a decision or action and must be considered in planning and execution.