A Sales Returns and Allowances Account Is Not Debited If

question 220

Multiple Choice

A Sales Returns and Allowances account is not debited if a customer

• A) returns defective merchandise.
• B) receives a credit for merchandise of inferior quality.
• C) utilizes a prompt payment incentive.
• D) returns goods that are not in accordance with specifications.

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Definitions:

Large Sales Volume

A significant amount of products or services sold within a given period, indicating high demand or successful sales strategies.

Retail Method

An accounting technique used to estimate the ending inventory and cost of goods sold by calculating a cost to retail price ratio.

Cost-To-Retail Ratio

A method used to estimate the ending inventory of a business, calculated by dividing the cost of goods available for sale by the retail price of the goods.

Gross Profit Rate

The ratio of gross profit to net sales, used to assess a company's financial health by indicating the efficiency of its production process.