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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.

Fundamentals of Accounting and Auditing

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