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:

Labor Rate Variance

The difference between the actual labor cost incurred and the labor cost that was expected or budgeted, typically due to wage rate differences.

Labor Standards

Benchmarks for the amount of labor time required to perform specific tasks, used for budgeting, scheduling, and performance evaluation.

Last Month Data

Information or statistics pertaining to the previous month, often used in analysis and decision-making processes.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or budgeted) cost.