Verde Co.returned $500 of merchandise that was purchased on account.As a result of this transaction,assets will:
A)decrease and liabilities will decrease.
B)decrease and net income will decrease.
C)stay the same and net income will decrease.
D)stay the same and liabilities will decrease.

Question

Quizplus · Accepted Answer

When merchandise that was purchased on account is returned,Inventory,an asset account,will decrease and Accounts Payable,a liability account,will decrease.When merchandise is returned,there is no effect on revenue or expenses and,as a result,there is no effect on net income.

Verde CoReturned $500 of Merchandise That Was Purchased on Account