WileyPLUS Assignment: Financial Accounting: Tools For Business Decision Making, Ch. 4 - Learning Activity - Week3 - ACC/290 - eCampus

• • Hi class,

    This week we are also learning how to use contra accounts. The most common contra revenue account would be sales returns. In theory there would be two ways to record a return. The first would be to debit Sales and credit Cash. Another way to record this would be to debit "Sales Returns" and credit cash. The Sales Returns account would be listed on the income statement right below Sales, which is a normal credit balance. When you add the two amounts together, you would get the true sales amount. Does this help explain contra accounts? What are some reasons a manager may want to see the returns separated out? Can you describe any other processes that might use contra accounts and their purpose?