All of the Following Statements Regarding Sales Returns and Allowances

question 226

Multiple Choice

All of the following statements regarding sales returns and allowances are true except:

• A)A reduction in the selling price because of damaged merchandise is included in sales returns and allowances.
• B)There is no relationship between sales returns and allowances and the possibility of lost future sales.
• C)Sales returns and allowances are recorded in a separate contra-revenue account.
• D)Sales returns and allowances are rarely disclosed in published financial statements.
• E)Sales returns and allowances are closed to the Income Summary account.

---

Definitions:

Fees

Fees are the charges levied by an entity in exchange for services or the grant of certain rights, differing from salaries or hourly wages.

Architect

A professional who plans, designs, and oversees the construction of buildings.

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial losses.

Construction

The process of building, erecting, or constructing buildings, roads, or other substantial structures.