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What type of accounts are Sales Discounts and Sales Returns and Allowances? How are they presented in a multi-step income statement?

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Final answer:

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that deduct from gross sales to calculate net sales on the income statement.


Explanation:

Sales Discounts and Sales Returns and Allowances are contra revenue accounts in accounting.

In a multi-step Income Statement, Sales Discounts and Sales Returns and Allowances are presented as deductions from gross sales to arrive at net sales.

Net sales is a critical figure in the income statement as it reflects the actual revenue generated by the business after accounting for discounts and returns.


Learn more about Sales Discounts and Sales Returns and Allowances here:

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