A company uses the Sales Returns and Allowances account to record
A) a discount offered for a large quantity purchase.
B) a discount received from a supplier to encourage prompt payment.
C) returns of inventory to suppliers.
D) customer returns of prior sales.

Question

Quizplus · Accepted Answer

The Sales Returns and Allowances account is specifically used to record transactions related to customer returns of previously sold goods. This account allows a company to track the amount of sales that were either returned by customers or for which allowances were made, separate from the initial sales revenue.

A Company Uses the Sales Returns and Allowances Account to Record