When Do Most Companies Record Sales Returns and Allowances

question 48

Multiple Choice

When do most companies record sales returns and allowances?

• A)During the month in which the sale occurs
• B)During the accounting period in which the return occurs
• C)Whenever the customer contacts the company regarding the credit
• D)During the month after the sale occurs

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Definitions:

APT

APT, or Arbitrage Pricing Theory, is a financial model that estimates the returns on an asset based on its risk in relation to multiple risk factors.

Well-Diversified Portfolio

A collection of investments that spread out risk by incorporating a wide variety of assets, thereby minimizing the impact of any single asset's performance on the overall portfolio.

Fama and French

Two economists known for their research on the factors that influence stock returns, notably the three-factor model which includes market risk, size, and value factors in explaining stock returns.

Multifactor Model

A financial model that evaluates securities by considering multiple economic and financial factors to explain asset prices and predict investment returns.