Under ASPE, the Sales Returns Account and the Sales Discounts

question 149

True/False

Under ASPE, the Sales Returns account and the Sales Discounts account are both classified as expense accounts.

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Definitions:

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Variable Costs

Costs that vary directly with the level of production or sales activity.

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs.

Net Income

The earnings of a company after taking into account all expenses, including operational costs, interest, and taxes, subtracted from its total revenue.