The balance of the Sales Returns and Allowances account is subtracted from the balance of the Accounts Receivable account in the Assets section of the balance sheet.

Question

Quizplus · Accepted Answer

The balance of the Sales Returns and Allowances account is actually subtracted from the Sales Revenue account, not the Accounts Receivable account, to calculate the net sales in the income statement. Accounts Receivable is shown at its gross amount in the balance sheet.

The Balance of the Sales Returns and Allowances Account Is