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sales returns and allowances
Tags: Allowances, RETURNS, Sales
In accounting speak, sales returns and allowances are two related types of transactions that act against a company's total sales on the income statement. Sales returns represents merchandise items that have been returned by unsatisfied customers for refunds for whatever reason. Sales allowances are similar however in such circumstances customers keep the merchandise for a reduced price.
As such transactions act against sales revenue, they are considered to be a contra-revenue account rather than expense accounts which are actual costs. This stuff is even more exciting than it sounds, meaning that accountants are an incredibly wild bunch.
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