Question

If a customer is unhappy with a product and the company reduces the amount the customer must pay but the customer keeps the product, this is called A. a sales discount B. an allowance for doubtful accounts C. a sales return D. a sales allowance

Answer 1

Answer: D. a sales allowance

Explanation:

A SALES ALLOWANCE allows for a customer to keep a good at a deducted price from the original.

This is not like a Sales Return because there is no physical return, just a reduction in price and the customer still keeps it.

Should this happen, the Sales Return is recorded under the "SALES RETURNS AND ALLOWANCES" account.