Accountıng I Deneme Sınavı Sorusu #1313942
Which of the following is true for "sales returns and allowances"?
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Sales returns and allowances are the amount owed to a company by customers as a result of delivering goods or services |
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Sales returns and allowances are comparably liquid form of asset, where usually it takes 30 to 90 days to be converted into cash. |
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Sales returns and allowances are recognized when a company delivers good or services on credit |
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Sales returns and allowances show the credit sales price adjusted for returns, |
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Sales returns and allowances reduce the amount of accounts receivables. |
Return facility is often part of a company’s marketing program that enables it to maintain competitiveness. It is basically a contra sales account that records (1) any goods returned by the customers and (2) any allowance given to a customer because the company delivered defective or improper goods. As a result, this will reduce the company’s account receivable.Sales returns and allowances reduce the amount of accounts receivables since the customer delivers back the goods or the company waives a portion of its claim due to product defects.
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