The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.

Question

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A sales return and allowance allows customers to return purchased goods or receive a price reduction, leading to a decrease in sales revenue. This also results in either a decrease in cash (if a refund is given) or a decrease in accounts receivable (if a credit is issued).

The Effect of a Sales Return and Allowance Is a Reduction