Amber Best 07/25/2019 Chapter 7 – Assignment 7 ACC101 GLH-TH6 1. How are the net sales for an accounting period determined? Net sales are total revenue, less the cost of sales returns, allowances, and discounts. 2. What purposes does the schedule of accounts receivable serve? The schedule of accounts receivable can be used to double-check the outstanding customer balances and generate notices to be mailed to those customers. 3. How do retail and wholesale businesses differ? In retail you are selling merchandise in small quantities, in wholesale you are selling in bulk quantities. 4. Why is a sales return or allowance usually recorded in a special Sales Returns and Allowances account rather than being debited to the Sales account? In the sales revenue section of an income statement, the sales returns and allowances account is subtracted from sales because these accounts have the opposite effect on net income. Therefore, sales returns and allowances is considered a contra-revenue account, which normally has a debit balance.
You've reached the end of your free preview.
Want to read both pages?
- Summer '19
- Revenue, Generally Accepted Accounting Principles, Net Sales