Which of the Following Statements Regarding Sales Returns and Allowances

question 117

Multiple Choice

Which of the following statements regarding sales returns and allowances is correct?

• A) Recording sales returns and allowances in a separate account is an important internal control that allows management to evaluate the volume of returns and allowances as a potential indicator of the quality of their products.
• B) The Sales Returns & Allowances account balance should be added to the Sales account balance when computing net sales.
• C) The Sales Returns & Allowances account is an example of a contra-asset account.
• D) Recording a sales allowance requires two entries.

---

Definitions:

Inhibitions

The process of holding back or restraining behaviors, emotions, or impulses.

Foot-In-The-Door Phenomenon

A compliance tactic that involves getting a person to agree to a large request by first setting them up by having that person agree to a modest request.

Cognitive Dissonance

The mental discomfort experienced when holding two or more contradictory beliefs, values, or ideas simultaneously.

Attitudes

Psychological tendencies expressed by evaluating particular entities with some degree of favor or disfavor.