1
Q
What is a contra revenue account?
A
A contra revenue account is used to record reductions in revenue.
Examples include Sales Discounts and Sales Returns and Allowances.
2
Q
What are Sales Discounts?
A
Sales Discounts are reductions in the amount of revenue recognized from sales due to early payment or promotional offers.
3
Q
What are Sales Returns and Allowances?
A
Sales Returns and Allowances are reductions in revenue due to returned goods or allowances granted to customers.
4
Q
What is required for recording sales transactions in a perpetual accounting system?
A
Each sales transaction requires two entries:
1. Revenue entry (Dr. cash or A/p, cr. Sales)
2. Expense entry (Dr. COGS; cr. inventory)
