A Sales Returns and Allowances account is NOT debited if a customer
A) returns defective merchandise.
B) receives a credit for merchandise of inferior quality.
C) utilizes a prompt payment incentive.
D) returns goods that are not in accordance with specifications.

Question

Quizplus · Accepted Answer

The Sales Returns and Allowances account is used to record returns of merchandise by customers or allowances given for damaged or unsatisfactory goods. A prompt payment incentive, such as a discount for early payment, does not involve returning goods or receiving allowances for quality issues, hence it does not involve debiting the Sales Returns and Allowances account.

A Sales Returns and Allowances Account Is NOT Debited If