Regarding the End of Period Adjusting Entries to Record Estimated

question 80

Multiple Choice

Regarding the end of period adjusting entries to record estimated sales returns,which of the following statements is correct? (Assume the perpetual inventory system is used.)

• A) Companies use data published by the FASB to estimate the amount of sales returns related to the sales of similar companies.
• B) It is acceptable to prepare a single adjusting entry which debits Estimated Returns Inventory and credits Refunds Payable.
• C) Both Sales Revenue and Cost of Goods Sold accounts are decreased.
• D) Estimated Returns Inventory is an income statement account.

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often driven by international trade and investment.

Research And Development (R&D) Center

A facility or department dedicated to investigating and developing new products, processes, or technologies.

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The total market value of all goods and services produced within a country in a given period, often used as an indicator of the economic health of a country.

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A situation where the demand for a specific skill set exceeds the supply of individuals with those skills within a labor market.