Asked by Anh Th? Hoang on Jun 25, 2024
Verified
Sales Discounts and Sales Returns and Allowances are contra-asset accounts.
Contra-Asset Accounts
Accounts on a balance sheet that have a balance opposite to the normal balance of an associated account, used to lower the value of the associated assets (e.g., accumulated depreciation).
Sales Discounts
A reduction in the price of goods or services sold, offered by the seller as an incentive to buyers.
- Explain the meanings of contra-revenue, contra-asset, and revenue accounts within the framework of sales transactions.
Verified Answer
SS
Simran SohalJun 25, 2024
Final Answer :
False
Explanation :
Sales Discounts and Sales Returns and Allowances are contra-revenue accounts, not contra-asset accounts. They are used to reduce the total revenue from sales reported on the income statement.
Learning Objectives
- Explain the meanings of contra-revenue, contra-asset, and revenue accounts within the framework of sales transactions.