Which of the following related to net sales provides an increase in assets or wealth?

• A. Recognizing sales returns and allowances
• B. Recording additional sales revenue
• C. Writing off uncollectible accounts
• D. Granting sales discounts to customers

Answer: (B)

Verified step by step guidance

1. Understand the concept of net sales: Net sales is calculated as gross sales minus sales returns and allowances, sales discounts, and other deductions. It represents the actual revenue earned from sales transactions.
2. Analyze the impact of recognizing sales returns and allowances: Sales returns and allowances reduce the gross sales figure, which decreases net sales and does not increase assets or wealth.
3. Evaluate the effect of recording additional sales revenue: Recording additional sales revenue increases the gross sales figure, which directly contributes to an increase in net sales. This, in turn, increases assets or wealth as it reflects higher revenue generation.
4. Consider the impact of writing off uncollectible accounts: Writing off uncollectible accounts reduces accounts receivable and does not contribute to an increase in assets or wealth. It is a loss recognition process.
5. Assess the effect of granting sales discounts to customers: Sales discounts reduce the gross sales figure, which decreases net sales and does not increase assets or wealth.