What is the impact of treating sales returns and allowances as a contra revenue but treating sales discounts and credit card discounts as selling expenses?
A) Gross margin is reduced by sales returns and allowances, sales discounts and credit card discounts.
B) Gross margin is reduced by sales returns and allowances but all three accounts cause a decrease in proﬁt from operations.
C) Gross margin is reduced by sales returns and allowance but operating proﬁt is only reduced by sales discounts and credit card discounts.
D) Gross margin is reduced by sales discounts and credit card discounts but all three accounts cause a decrease in proﬁt from operations.

Question

Quizplus · Accepted Answer

Sales returns and allowances reduce gross margin, while all three accounts (sales returns and allowances, sales discounts, and credit card discounts) decrease profit from operations.

What Is the Impact of Treating Sales Returns and Allowances