What Effect Will the Return of Merchandise to the Supplier

question 26

Multiple Choice

What effect will the return of merchandise to the supplier have on the accounting equation?

• A)Assets and equity are reduced by $1,500.
• B)Assets and liabilities are reduced by $1,470.
• C)Assets and liabilities are reduced by $1,500.
• D)None. It is an asset exchange transaction.

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Definitions:

Obligation

A duty or commitment that an individual or organization is required to fulfill, whether by law, contract, or moral necessity.

Information Power

Information power is the access to and/or the control of information.

Positive Valence

A term used in psychology to describe the attractive or desirable nature of a stimulus, which influences a person’s motivation to pursue or engage in it.

Negative Valence

The negative emotional charge or undesirable assessment associated with a thought, event, or stimulus.