Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited during the closing process.

Question

Quizplus · Accepted Answer

Sales Discounts and Sales Returns and Allowances are indeed contra revenue accounts, but they are not debited during the closing process. Instead, their balances are subtracted from gross sales to calculate net sales. The closing process involves transferring their balances to the Income Summary account to calculate the net income or loss for the period.

Sales Discounts and Sales Returns and Allowances Are Contra Revenue