When a Customer Returns a Defective Product for Credit, the Seller

question 81

Multiple Choice

When a customer returns a defective product for credit, the seller would record the transaction using which of the following accounts?

• A) Purchase Returns and Allowances
• B) Sales Returns and Allowances
• C) Sales
• D) Sales Discounts

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Definitions:

Total Assets

Total assets represent the sum of all assets owned by a company, including both current and non-current assets.

ROE

A financial ratio expressing the profitability of a firm in relation to stockholders' equity, used to assess how efficiently a company uses investments to generate profit.

Common Equity

The portion of a company's equity that is held by common shareholders, represented by common stock.

Net Income

The profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.