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Net Profit Ratio

Goods distrib...

Question

Goods distributed as free samples is an example of _________.

A

No change in Owner's Equity

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B

Increase in Asset & Owner's Equity

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C

Decrease in assets & Owner's Equity

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D

None of these

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Solution

The correct option is C Decrease in assets & Owner's Equity
Free Samples a/c Dr.
To Purchases a/c
So, there will be a decrease in owners equity and a decrease in stock.

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