All of the Following Statements Regarding Sales Returns and Allowances

question 73

Multiple Choice

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

• A) Sales returns and allowances are rarely disclosed in published financial statements.
• B) Sales returns and allowances are recorded in a separate contra-revenue account.
• C) There is no relationship between sales returns and allowances and the possibility of lost future sales.
• D) Sales returns and allowances are closed to the Income Summary account.
• E) A reduction in the selling price because of damaged merchandise is included in sales returns and allowances.

---

Definitions:

Role-Sets

Concept in sociology referring to the array of roles and behaviors expected of an individual in a particular social position.

The Grapevine

An informal, unofficial, and personal communication network found within or across organizations, which is faster and more versatile than formal channels.

Informal Channel

A method of communication that occurs outside official or formal organizational structures, often relying on personal networks or social media.

Communication

The process of exchanging information, thoughts, messages, or speeches, either verbally or non-verbally, between two or more parties.