Answer the following statements true (T) or false (F)
1. Sales Discounts is added to the Sales account when computing a company's net sales.
2. Sales discounts has a normal debit balance because it decreases Sales, which has a normal credit balance.
3. Under a perpetual inventory system, when a credit customer returns non-defective
merchandise to the seller, the seller debits Sales Returns and Allowances and credits Accounts Receivable and also debits Merchandise Inventory and credits Cost of Goods Sold.
4. Each sale of merchandise has two parts: the revenue side and the cost side.
5. A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
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