Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

题目解析

Question

Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount?

题目解析

BlackTom AI · Accepted Answer

Let's evaluate each option against how recording a credit card discount affects net sales, operating expenses, and net income.
Option A: 'Net sales decrease and gross profit decreases.' When a credit card discount is recorded, net sales typically decrease by the amount of the discount, since revenue is net of the discount. However, gross profit is calculated as net sales minus cost of goods sold (COGS). Since COGS is usually not affected by the discount, gross profit would not necessarily decrease due to the discount itself; it would depend on whether the discount is treated as a reduction of sales (net sales) rather than a direct change to COGS. In many treatments, gross profit remains impacted only via the lower net sales, but the direct consequence stated here is that gross profit decreases, which can be misleading because the COGS side remains unchanged. This description is therefore not precisely correct in standard practice.
Option B: 'Net sales decrease and net income decreases.' This aligns with the typical outcome: net sales fall due to the discount, and the discount also adds an expense, both of which reduce net income. While not every nuance is shown, the overall effect on net income is correctly described as a decrease.
Option C: 'Operating expenses remain the same and net income decreases.' The credit card discount typically incurs an additional expense (a card processing fee or discount expense), so operating expenses do not stay the same; they increase by the amount of the discount fee. Thus, stating that operating expenses remain the same is inaccurate, making this option incorrect.
Option D: 'Net sales decrease, operating expenses increase, and net income remains the same.' Here, while net sales do decrease and operating expenses increase, asserting that net income remains the same is not generally correct. The combined effect of lower revenues and higher expenses would normally reduce net income, unless the amounts coincidentally offset exactly, which is not a standard or guaranteed outcome. Therefore this description is also not correct.
In summary, options B and C address key parts of the impact (net sales change, expenses change, and NI movement) with varying accuracy, while A and D make claims that misstate either the effect on gross profit or the net income outcome. The particular framing in option D that NI remains the same is the part that does not correctly describe the typical effect of recording a credit card discount.

Which of the following does not correctly describe the effect of a journal entry involving the recording of a credit card discount? 题目解析

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