All of the following statements regarding sales returns and allowances are except:
A) Sales returns and allowances can include a reduction is the selling price because of damaged merchandise.
B) Sales returns and allowances do not reflect the possibility of lost future sales.
C) Sales returns and allowances are recorded in a separate contra-revenue account.
D) Sales returns and allowances are rarely disclosed in published financial statements.
E) Sales returns and allowances are closed to the Income Summary account.

Question

Quizplus · Accepted Answer

Sales returns and allowances can indeed reflect the possibility of lost future sales because they represent customer dissatisfaction or issues with the product, which can affect future purchasing decisions and customer loyalty.

All of the Following Statements Regarding Sales Returns and Allowances