Which of the following does not correctly describe the effect of a credit card discount?
A)Net sales decrease and gross profit decreases.
B)Net sales decrease and net income decreases.
C)Operating expenses remain the same and net income decreases.
D)Neither operating expenses, nor net income is affecteD.The credit card discount account is a contra-revenue account, which reduces net sales, gross profit, and therefore net income.

Question

Quizplus · Accepted Answer

This is incorrect as the credit card discount account is a contra-revenue account, which reduces net sales, gross profit, and therefore net income. Therefore, neither operating expenses, nor net income is unaffected.

Which of the Following Does Not Correctly Describe the Effect