A Sales Returns and Allowances account is not debited if a customer
A) returns defective merchandise.
B) receives a credit for merchandise of inferior quality.
C) utilizes a prompt payment incentive.
D) returns goods that are not in accordance with specifications.

Question

Quizplus · Accepted Answer

A Sales Returns and Allowances account is typically used to record returns or allowances made to customers for merchandise that is defective, not in accordance with specifications, or of inferior quality. However, if a customer utilizes a prompt payment incentive (such as a discount for paying early), this does not result in a return or allowance and therefore should not be recorded in the Sales Returns and Allowances account.

A Sales Returns and Allowances Account Is Not Debited If