The Sales Returns and Allowances Account and the Sales Discounts

question 109

True/False

The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense accounts.

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Definitions:

Production Costs

The cumulative costs involved in creating a product, including labor, materials, and overhead expenses.

Period Costs

Expenses that are not directly tied to the production process and are charged to expense in the period they are incurred, such as selling and administrative expenses.

Overapplied Overhead

A situation where the actual manufacturing overhead costs are less than the overhead allocated to products during a specific period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, estimated before the costs are actually incurred.