Which of the Following Statements Regarding Sales Returns and Allowances

question 36

Multiple Choice

Which of the following statements regarding sales returns and allowances is not true?

• A)A reduction in the selling price because of damaged merchandise is included in sales returns and allowances.
• B)Sales returns and allowances do not have an impact on gross profit.
• C)Sales returns and allowances are recorded in a separate contra-revenue account.
• D)Sales returns and allowances are rarely disclosed in published financial statements.
• E)Sales returns and allowances are closed to the Income Summary account.

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Definitions:

Extraordinary Repairs

Expensive and infrequent repairs that significantly extend the life of an asset beyond its original estimate.

Copyright

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Patent

A form of intellectual property protection that grants the patent holder exclusive rights to make, use, sell, and distribute an invention for a certain period.

Trademark

A symbol, word, or words legally registered or established by use as representing a company or product.