Which of the Following Statements Regarding Sales Returns and Allowances

question 120

Multiple Choice

Which of the following statements regarding sales returns and allowances is true?

• A)Recording sales returns and allowances in a separate account is an important internal control that allows management to evaluate the volume of returns and allowances as a potential indicator of the quality of their products.
• B)The Sales Returns and Allowances account balance should be added to the Sales account balance when computing net sales.
• C)Sales Returns and Allowances account is an example of a contra-asset account.
• D)Recording a sales allowance requires two entries.

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Definitions:

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