A Debit to Sales Returns and Allowances and a Credit

question 79

Multiple Choice

A debit to Sales Returns and Allowances and a credit to Accounts Receivable

• A) Is not possible; it should be a credit to Sales Returns and Allowances and a debit to Accounts Receivable
• B) Recognizes that a customer returned merchandise
• C) Requires a debit memorandum to recognize the customer's return
• D) Recognizes a cash discount taken by a customer
• E) All of the above

---

Definitions:

Capital Decrease

A reduction in the amount of equity owned by shareholders or owners of a company, often resulting from losses or distribution of dividends.

Salary Allowances

Salary allowances are specific amounts designated in an individual’s salary package for purposes like housing, travel, medical expenses, etc., often with tax implications.

Partnership Income

The earnings generated by a partnership that are distributed to its partners according to their agreement.

Income Summary

An account used in the closing process that summarizes the revenues and expenses of an accounting period, to determine the net income or loss.