Which of the following correctly describes the effect of a sales discount?
A)Gross profit increases.
B)Net sales increases.
C)Current assets remain the same.
D)Net income decreases.

Question

Quizplus · Accepted Answer

Sales discounts reduce the amount of revenue a company recognizes, which in turn lowers net income. They do not directly affect gross profit calculations, net sales are reduced (not increased), and current assets are affected because the receivable or cash collected is less than it would have been without the discount.

Which of the Following Correctly Describes the Effect of a Sales