A business firm has purchased inventory on account; and received them. This transaction has been correctly recorded. However, some items were returned for wrong specification. What happens to the fundamental accounting equation (A=L+E) when the return is made? This is a question of impact analysis. Assume that all payment has been postponed with no payments at the time of the purchase. The company's assets decrease, total llabilities remain the same, and owners' equity increases. One asset account decreases, and one liability account also decreases. The company's assets increase, total liabilities increase, and owners' equity decreases. One asset account decreases while another asset account increases. Therefore, no impact is anticipated in the equation (A=L+E)