When a Customer Returns for Credit a Defective Product It

question 135

Multiple Choice

When a customer returns for credit a defective product it had purchased,the seller would record the transaction using which of the following accounts?

• A) Purchase Returns & Allowances
• B) Sales Returns & Allowances
• C) Sales Revenue
• D) Sales Discounts

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Definitions:

Inventory

The quantity of goods and materials a business holds for the purpose of resale or production.

Short-Term Assets

Assets expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.

Pro Forma Assets

Projected assets of a business, listed in a financial statement prepared in anticipation of future events or transactions.

Owner's Equity

The residual interest in the assets of an enterprise after deducting its liabilities, often referred to as net assets.