Question

What is the financial impact on a company when a customer returns a product for a​ refund? A. Sales revenue will decrease because sales revenue will be debited. B. Sales revenue will increase because sales revenue will be credited. C. Sales revenue will not be impacted because the company has already accrued for estimated refunds and returns. D. Returns expense will increase because returns expense will be debited.

Answer 1

Answer:

The correct answer is A.Sales revenue will not be impacted because the company has already accrued for estimated refunds and returns.

Explanation:

If a customer wishes to return or obtain a refund of any product or service that you have sold and that you have been paid for, you must create and register a sales credit note that specifies the required change. To include the correct sales invoice information, you can create the sales credit note directly from the posted sales invoice or you can create a new sales credit note with copied invoice information.