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Sales Discounts is a __________ account.

A. contra asset
B. expense
C. asset
D. revenue
E. contra revenue

Sagot :

GinnyAnswer

Final answer:

Sales Discounts is a contra revenue account used to track reductions in revenue due to discounts, ensuring accurate financial representation.


Explanation:

Sales Discounts is a contra revenue account. It is used to track the reduction in revenue that occurs when customers are given discounts on the listed price of goods or services.

For instance, if a product is listed for [tex]$100 but a customer is given a 10% discount, the actual revenue earned will be $[/tex]90. This $10 difference is recorded in the Sales Discounts account.

It helps in presenting a more accurate picture of a company's financial performance by reflecting the impact of discounts on the reported revenues.


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