The Sales Returns and Allowances Account

question 13

Multiple Choice

The Sales Returns and Allowances account:

• A) normally has a credit balance.
• B) should not be closed at the end of the period.
• C) is a contra account to Accounts Receivable.
• D) is a contra revenue account.

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Definitions:

Underapplied Manufacturing Overhead

Happens when the budgeted costs for manufacturing overhead are lower than the overhead expenses actually experienced.

Overapplied Manufacturing Overhead

A scenario in which the overhead costs assigned to manufacturing surpass the real overhead expenses that were incurred.

Adjusted Cost

The modified cost of an asset or inventory that factors in deductions, additions, or changes due to various adjustments.

Cost of Goods Manufactured

The total production cost of goods that have finished the manufacturing process within a specific period.