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.

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Definitions:

Splenic Flexure

The part of the large intestine that connects the transverse colon to the descending colon, located near the spleen.

Sigmoid Colon

The part of the large intestine that is closest to the rectum and anus.

Transverse Colon

The middle part of the large intestine, passing across the abdomen from right to left below the stomach.

Descending Colon

The part of the large intestine that descends from the splenic flexure to the sigmoid colon, involved in water and electrolyte absorption.