All of the Following Statements Regarding Sales Returns and Allowances

question 189

Multiple Choice

All of the following statements regarding sales returns and allowances are true except:

• A) Sales returns and allowances estimates are typically made as period-end adjustments.
• B) When sales returns and allowances adjustments are made to sales, an estimate must also be made for the cost side.
• C) The Inventory Returns Estimated account is a current liability account.
• D) New revenue recognition rules require sellers to report sales net of expected returns and allowances for annual periods.
• E) Sales Refund Payable is a current liability account.

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Definitions:

Cost Controllability

The ability of a manager or business to influence or manage the costs associated with business operations.

Cost Incurrence

The moment when a company or individual recognizes a financial obligation or expense through the receipt of goods or services.

Responsibility Level

An organizational unit or position that has a specific set of duties and responsibilities for which they are accountable.

Indirect Costs

Expenses not directly associated with the production of goods or services, such as administration and rental costs.