Which of the Following Accounts Is Always Treated as a Contra

question 6

Multiple Choice

Which of the following accounts is always treated as a contra revenue and not as a selling expense?

• A) Net sales
• B) Cash equivalents
• C) Sales returns and allowances
• D) Purchase returns and allowances

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Definitions:

Fiscal Year

A one-year period used for financial and tax reporting purposes, which may or may not align with the calendar year, depending on the company or organization.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of the company does not change.

Market Price

The current value at which an asset or service can be bought or sold in the marketplace.

Shares Outstanding

Refers to all of the shares of a corporation that have been issued and are held by shareholders, including those held by the public as well as restricted shares owned by the company’s insiders.