Which of the Following Accounts Is Classified as a Contra

question 10

Multiple Choice

Which of the following accounts is classified as a contra revenue account?

• A)Sales Revenue
• B)Cost of Goods Sold
• C)Sales Returns and Allowances
• D)Purchase Discounts

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Definitions:

Credit Terms

The agreement between a buyer and a seller that outlines the payment terms for goods or services, including the due date and any interest or penalties for late payment.

FOB Shipping Point

A term indicating that the buyer assumes responsibility for the goods and shipping costs once the goods leave the seller's premises.

Perpetual Inventory

An inventory management system where updates are made continuously to reflect items added or sold, providing a real-time view of inventory levels.

Freight In

Costs associated with transporting goods into a warehouse or to a business, typically recorded as part of inventory cost.