Sales Returns Affect Net Cash Collections When a Customer Has

Multiple Choice

Sales returns affect net cash collections when a customer has the right to return a product for a refund, and the firm can reasonably estimate the amount of returns at the time of sale, U.S.GAAP and IFRS

A) require that the firm use the allowance method to estimate and recognize the effects of returns.
B) the selling firm debits a revenue contra account for expected returns to reduce current period revenues to the estimated amount that will not be returned.
C) require that the firm measures revenues based on the amount of cash it expects to collect from current period sales.
D) preclude revenue recognition when customers have the right to return goods unless the firm can reasonably estimate the amount of returns.
E) all of the above