A Debit to Sales Returns and Allowances and a Credit

question 45

Multiple Choice

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

• A) Reflects an increase in amount due from a customer.
• B) Is recorded when a customer takes a discount.
• C) Records the cost side of a sales return.
• D) Reflects a decrease in amount due to a supplier.
• E) Recognizes that a customer returned merchandise and/or received an allowance.

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Definitions:

Formalities

Specific procedures, requirements or conditions that are mandated by law or established practice.

Partnership

A form of business organization; specifically, an association of two or more persons to carry on a business as co-owners for profit.

Leases

Contracts in which one party, the lessor, grants another party, the lessee, the right to use an asset for a specified period in return for regular payments.

Property

Legally recognized rights to possess, use, and dispose of something tangible or intangible.