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

Question

Quizplus · Accepted Answer

A sales return reduces the revenue recognized from the original sale, which in turn decreases the gross profit. The other options are incorrect because net sales would decrease (not increase) due to the return, current assets would decrease if a refund is issued, and net income would decrease due to the reduction in revenue and gross profit.

Which of the Following Correctly Describes the Effect of a Journal