13. The following entry is taken from the yournal of am Cost of Goods Sold Merch

Question

13. The following entry is taken from the yournal of am Cost of Goods Sold Merchandise Inventory What is the effect of this entry on thve accounting A. Assets and equity will decrease. B. Assets will decrease and equity will increase C. Assets and equity will increase. D. None of these. reduces the 14. Which internal control procedure is the most important procedure that of employce fraud or theft if collusion is required to accomplish fraud or thet? A. Use of prenumbered documents. B. Physical controls. C. Fidelity (Employee) bonding D. Separation of duties.

Explanation / Answer

13. Option A is correct; Asset and equity will decrease.

Explanation:

Merchandise inventory is a current asset. When good is sold , then it flows out of the business , therefore assets decreases.Cost of good sold is an expense for the business. All expenses decreases the equity.

So both assets and equity will decrease.

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