Indicate whether the given statement is true or false.
Answer to Problem 1TF
The given statement is true.
Explanation of Solution
Sales allowance: The amount of reduction in sale price granted by the seller to the buyers for the goods returned due to defects or damages in the product, or incorrect sizes, is referred to as allowance granted by seller.
Description: Sometimes, customers either return goods due to manufacturing defects, or accept to keep the defective goods for a reduction in sale price. That amount of reduction in sale price, is referred to as sales allowances. Hence, the statement is true.
Thus, the given statement is true, in stating that the reduction in sale price of the defective merchandise is referred to as sales allowance.
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Chapter 10 Solutions
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
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