What would be the effect of the return of goods previously sold on credit before payment is received on the statement of financial position, the income statement and the cash flow statement?
A) Increase the inventory and liabilities in the statement of financial position, no effect on the income statement, no effect on the cash flow statement
B) Increase the inventory and receivables in the statement of financial position, charge expense to the income statement, show cash outflow in the cash flow statement
C) Increase the inventory and reduce the receivables in the statement of financial position, no effect on the income statement, no effect on the cash flow statement
D) Increase the inventory and reduce the receivables in the statement of financial position, reduce sales and cost of sales in the income statement, no effect on the cash flow statement
E) Increase the inventory and reduce the receivables in the statement of financial position, reduce sales in the income statement, no effect on the cash flow statement

Question

Quizplus · Accepted Answer

The Answer is D

What Would Be the Effect of the Return of Goods