All of the Following Statements Regarding Sales Returns and Allowances

question 250

Multiple Choice

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

• A)New revenue recognition rules require sellers to report sales net of expected returns and allowances for annual periods beginning after December 15, 2017.
• B)The Inventory Returns Estimated account is updated each time a sale is made.
• C)Sales returns and allowances estimates are typically made as period-end adjustments.
• D)When sales returns and allowances adjustments are made to sales, an estimate must also be made for the cost side.
• E)A credit memorandum is issued by the seller to inform a buyer of the seller's credit to the buyer's Accounts Receivable on the seller's books.

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Definitions:

Standard Normal

A standard normal distribution is a normal distribution with a mean of 0 and a standard deviation of 1.

Probability Distribution

A statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

Mean

The average value of a set of numbers, calculated by dividing the sum of all the numbers by the count of items in the set.

Uniform Probability Distribution

A type of probability distribution where all outcomes are equally likely to occur.