With respect to the income statement
A) contra-revenue accounts do not appear on the income statement.
B) sales discounts increase the amount of sales.
C) contra-revenue accounts increase the amount of operating expenses.
D) sales discounts are included in the calculation of gross profit.

Question

Quizplus · Accepted Answer

Sales discounts are subtracted from gross sales to calculate net sales, which is used in the calculation of gross profit. Contra-revenue accounts like sales discounts and returns reduce the total revenue figure on the income statement, rather than increasing sales or operating expenses.

With Respect to the Income Statement