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:

Long-run Equilibrium

The state in which all factors of production and costs are variable, and firms make neither excess profit nor losses, indicating stability in the market.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, resulting in firms being price takers.

Price

The amount of money required to purchase a good or service; the value that must be exchanged to acquire a specific product.

Short-run Industry Supply

The total quantity of goods that producers in an industry are willing and able to sell at different prices in a short period, without changing production capacity.