One of Hawk Company's customers returned products that cost Hawk $300, which was sold on account for $450. Which of the following does not correctly describe the effect of the return on the financial statements?
A)Gross profit decreases $150.
B)Total current assets decrease $150.
C)Sales returns and allowances increase $150.
D)Operating expenses increase $150.

Question

Quizplus · Accepted Answer

The return of the product does not affect operating expenses. It only affects gross profit, total current assets, and sales returns and allowances.

One of Hawk Company's Customers Returned Products That Cost Hawk