The Sales Returns and Allowances account is classified as a(n)
A) asset account.
B) contra asset account.
C) expense account.
D) contra revenue account.

Question

Quizplus · Accepted Answer

The Sales Returns and Allowances account is a contra revenue account because it has the opposite effect on revenue accounts. It is used to record returns, refunds, or allowances granted to customers for goods or services previously sold. By deducting from the revenue accounts, the net sales figure is obtained.

The Sales Returns and Allowances Account Is Classified as A(n)