Question

Which of the following statements regarding sales returns and allowances is false?

A. Sales returns and allowances are recorded as deductions from the total sales revenue.
B. Sales returns and allowances are typically associated with defective or unsatisfactory products.
C. Sales returns and allowances have no impact on the net sales figure.
D. A company may issue a credit memo to a customer for a sales return or allowance.

Answer 1

The false statement regarding sales returns and allowances is that they have no impact on the net sales figure.

Step-by-step explanation:

The correct statement is option C: Sales returns and allowances have no impact on the net sales figure. Sales returns and allowances are deductions from the total sales revenue, which reduce the net sales figure. They are typically associated with defective or unsatisfactory products, as stated in option B. When a customer returns a product or receives an allowance, the company may issue a credit memo, as mentioned in option D.