If a Customer Agrees to Retain Merchandise That Is Defective

question 170

Multiple Choice

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

• A)discount.
• B)return.
• C)contra asset.
• D)allowance.

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Definitions:

Merchandise

Goods or products that are bought and sold in retail or wholesale markets.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus accumulated depreciation or amortization.

Financing Activities

Transactions related to raising capital and repaying investors, including issuing equity, obtaining loans, and dividend payments, affecting the company's capital structure.

Bonds

Fixed income investment products that represent loans made by an investor to a borrower, typically corporate or governmental.