Tom's Textiles Shipped the Wrong Material to a Customer,who Refused

question 35

Multiple Choice

Tom's Textiles shipped the wrong material to a customer,who refused to accept the order.Upon receipt of the material,Tom's would credit Accounts Receivable and debit:

• A)Sales Revenue.
• B)Sales Discounts.
• C)Sales Returns.
• D)Sales Allowances.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders as a distribution of profits, typically in cash form, reflecting the company's profitability.

Cost Method

An accounting method used for investments, where the investment is recorded at its acquisition cost and adjustments are made for dividends received and changes in fair value are not recorded.

Trading Securities

Financial instruments bought and held primarily for selling them in the near term to profit from short-term price movements.

Fair Value

An estimate of the market value of an asset or liability, based on the price at which willing parties would enter into a transaction.