Which of the following statements regarding sales returns and allowances is not true?
A. Sales returns and allowances are recorded in a separate contra-revenue account.
B. Sales returns and allowances are closed to the Income Summary account.
C. Sales returns and allowances are rarely disclosed in published financial statements.
D. A reduction in the selling price because of damaged merchandise is included in sales returns and allowances.
E. Sales returns and allowances do not have an impact on gross profit.
Answer: E
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