A customer returns inventory that you previously sold to him on account and which he has not yet paid for. Which accounts on the seller's (i.e. your) books are affected? You can still sell the returned goods to someone else for full price.

Question 20 options:

a)

Sales returns increases, and accounts receivable and inventory both decrease

b)

Sales returns and inventory both increase, and accounts receivable and cost of goods both decrease

c)

Sales returns increases and accounts receivable decreases. No other accounts are affected.

d)

Only inventory and accounts payable both decrease

e)

Only sales and accounts receivable both decrease

f)

Sales returns increases, and accounts receivable, inventory and cost of goods sold all decrease