What Is the Impact of Treating Sales Returns and Allowances

question 130

Multiple Choice

What is the impact of treating sales returns and allowances as a contra revenue but treating sales discounts and credit card discounts as selling expenses?

• A)Gross margin is reduced by sales returns and allowances,sales discounts and credit card discounts
• B)Gross margin is reduced by sales returns and allowances but all three accounts cause a decrease in profit from operations
• C)Gross margin is reduced by sales returns and allowance but operating profit is only reduced by sales discounts and credit card discounts
• D)Gross margin is reduced by sales discounts and credit card discounts but all three accounts cause a decrease in profit from operations.

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Definitions:

Executor

A legal term referring to an individual appointed to carry out the terms of a will.

Estate Tax

Estate Tax is a tax levied on the net value of the estate of a deceased person before it is distributed to the heirs, applied in certain jurisdictions.

Trust Fund

A trust fund is a legal arrangement in which assets are held by a trustee for the benefit of another party, often used for estate planning or to manage assets for individuals or charities.

Demonstrative Legacy

A bequest in a will that specifies a particular asset or monetary source to fund the gift.