Asked by Gurlivleen Singh on Jun 14, 2024
Verified
Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.
Sales Returns And Allowances
Transactions where a customer returns goods to the seller or receives a reduction in the invoice price, thereby reducing the seller's sales revenue.
Sales Discounts
Reductions in the amount charged to customers as an incentive for early payment, recorded as a deduction from gross sales to calculate net sales.
Pay Accounts Promptly
The practice of settling owed amounts to suppliers or creditors within the agreed payment terms to avoid late fees and maintain good business relationships.
- Comprehend the bookkeeping practices for managing sales returns, allowances, and discounts.
Verified Answer
Sales Discounts, on the other hand, are discounts offered to customers who pay their accounts promptly, typically within a certain time frame (e.g. 2/10 net 30). This serves as an incentive for customers to pay their bills on time and improves the company's cash flow.
Learning Objectives
- Comprehend the bookkeeping practices for managing sales returns, allowances, and discounts.
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