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Contra Revenue Accounts: Adjusting for True Revenue in Accounting
Chapter 6, Problem 1(choose chapter or problem)
Which of the following is an example of a contra revenue account?
A. sales
B. merchandise inventory
C. sales discounts
D. accounts payable
Questions & Answers
QUESTION:
Which of the following is an example of a contra revenue account?
A. sales
B. merchandise inventory
C. sales discounts
D. accounts payable
ANSWER:Step 1 of 2
Sales discounts are an example of a contra revenue account. Contra revenue accounts are used to offset or reduce the amount of revenue generated by a company. Sales discounts are typically offered to customers as an incentive for early payment or other favorable terms. They represent a reduction in the selling price of goods or services.
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Contra Revenue Accounts: Adjusting for True Revenue in Accounting
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Discover the unique role of contra revenue accounts in accounting, emphasizing their debit balance nature and their use in adjusting gross revenue. Explore examples like sales discounts, returns, and allowances to grasp their impact on a company's reported income.