If a customer agrees to keep defective merchandise because the seller is willing to reduce the selling price, this transaction is known as a sales
A)discount.
B)return.
C)contra asset.
D)allowance.

Question

Quizplus · Accepted Answer

The transaction is known as an allowance, which is a reduction in the selling price granted by the seller to the buyer as an incentive to keep damaged or defective merchandise. This is different from a discount, which is a reduction in price offered by the seller to the buyer as an incentive to purchase a product. A return refers to the process of returning merchandise to the seller for a refund or credit. A contra asset is a type of asset account that is offset against a related asset account on the balance sheet to reflect the net balance.

If a Customer Agrees to Keep Defective Merchandise Because the Seller