The Dress Barn offered its customers a reduction in price on some clothing items that were slightly faded from being in the window at the front of the store. This reduction is called a
A) cost of goods sold.
B) sales allowance.
C) sales return.
D) sales discount.
E) sales bargain.

Question

Quizplus · Accepted Answer

A sales allowance is a reduction in price offered to customers due to some defect or imperfection in the product. In this case, the slight fading would be considered an imperfection, and the reduction in price offered to customers would be a sales allowance. The other options do not fit the scenario described. Cost of goods sold is the cost of producing or purchasing the goods sold, sales return is when a customer returns a product to the store, and sales discount is a reduction in price offered to incentivize prompt payment. Sales bargain is not a commonly used accounting term.

The Dress Barn Offered Its Customers a Reduction in Price