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:

Efficiency Variance

The difference between the actual amount of resources used in production and the amount that should have been used, reflecting efficiency in resource usage.

Direct Materials

Raw materials that are directly used in the production of a product, easily traceable to the product itself.

Rate Variance

The difference between the actual rate paid for goods or services and the expected (or standard) rate, most often related to labor or materials.

Direct Labor-Hours

Sum of working hours of staff directly participating in the production process of an item.