[The Following Information Applies to the Questions Displayed Below

question 114

Multiple Choice

[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 $1,176.
• C)Assets and liabilities decrease by $1,200.
• D)None.It is an asset exchange transaction.

Calculate and analyze budgeted figures in practical scenarios.

Describe the primary purposes of the budgeting process.

Grasp the strategic integration of budgeting with organizational strategies and plans.

Understand the role of external factors in forecasting and budgeting.

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Definitions:

Raw Start-up

A very early stage startup without a fully developed product, business model, or customer base, typically exploring a market opportunity.

High-growth Company

A business that experiences significantly higher than average rates of growth in revenue or other critical metrics.

Realization

The moment when a planned or expected outcome becomes reality, often used in the context of recognizing revenue or gains in business.

Stakeholders

Individuals or groups that have an interest, concern, or stake in an organization and its activities, including employees, customers, suppliers, investors, and the community.