One of Trent Company's Customers Returned Products That Had Been

question 126

Multiple Choice

One of Trent Company's customers returned products that had been sold on account for $800.Which of the following correctly describes the effect on the financial statements of the return?

• A)A contra-revenue account decreases $800.
• B)Accounts receivable decrease $800.
• C)Sales returns and allowances decrease $800.
• D)Net sales increase $800.

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Definitions:

State Lines

Geographical boundaries that separate individual states within a country, often influencing laws and regulations.

Foreign Corporation

A company incorporated under the laws of one country but doing business in another country, subject to specific regulatory and tax obligations.

Incorporated

The process of legally declaring a business as a corporation, which is recognized as a separate entity from its owners.

Legal Entity

An organization that has legal rights and obligations, including the ability to enter into contracts, sue, and be sued.