What Is the Impact of Treating Sales Returns and Allowances

question 69

Multiple Choice

What is the impact of treating sales returns and allowances as a contra revenue but treating sales discounts and credit card discounts as selling expenses?

• A) Gross margin is reduced by sales returns and allowances, sales discounts and credit card discounts.
• B) Gross margin is reduced by sales returns and allowances but all three accounts cause a decrease in profit from operations.
• C) Gross margin is reduced by sales discounts and credit card discounts but all three accounts cause a decrease in profit from operations.
• D) Gross margin is reduced by sales returns and allowance but operating profit is only reduced by sales discounts and credit card discounts.

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Definitions:

Herbaceous

Describes plants with soft, green stems, without significant woody tissue, and which might die back at the end of the growing season.

Woody

Describes plant stems and structures that are hard and fibrous, typically found in trees and shrubs.

Basal Angiosperms

Three clades of angiosperms that are thought to be ancestral to all other flowering plants. Compare with core angiosperms.

Core Angiosperms

A group within the angiosperms (flowering plants) that includes most of the common and well-known flowering plants.