Asked by Jason Rosete on Jun 11, 2024
Verified
A contra-revenue account with a debit balance for returned goods is called:
A) Sales Returns and Allowances.
B) Sales Discount.
C) Prepaid Returns.
D) the discount period.
Contra-revenue Account
An account that offsets revenue accounts on the income statement, such as sales returns, allowances, and discounts.
Sales Returns
Goods returned by customers after purchase, leading to a reduction in sales revenue.
Debit Balance
An accounting entry that represents the total amount debited from an account, exceeding the credits made into it.
- Acquire knowledge on the nature and the implications of sales returns and allowances on financial reporting.
Verified Answer
SD
Sairik Das - The Knowledge HubJun 16, 2024
Final Answer :
A
Explanation :
Sales Returns and Allowances is the contra-revenue account used to record the return of goods by customers or allowances given for damaged goods, thus it typically carries a debit balance.
Learning Objectives
- Acquire knowledge on the nature and the implications of sales returns and allowances on financial reporting.
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